First National Bank Balance sheet Assets Liabilities Rate sensitive $2...

First National Bank Balance sheet Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â AssetsÂ Â Â Â Â Â Â Â Â Â Liabilities Rate-sensitiveÂ Â Â $20 millionÂ Â Â Â Â Â Â Â $50 million Fixed-rateÂ Â Â Â Â Â Â Â Â Â $80 millionÂ Â Â Â Â Â Â Â $50 million 4) Given the above table and...

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Economics

First National Bank Balance sheet
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â AssetsÂ Â Â Â Â Â Â Â Â Â Liabilities
Rate-sensitiveÂ Â Â $20millionÂ Â Â Â Â Â Â Â $50million
Fixed-rateÂ Â Â Â Â Â Â Â Â Â $80 millionÂ Â Â Â Â Â Â Â $50million
4) Given the above table and assuming that the average durationof its assets is four years, while the average duration of itsliabilities is three years, then a 5 percentage point increase ininterest rates will cause the net worth of First National to (increase/decline) by (5% /10%/ 15%/ 20%) of thetotal original asset value (use duration analysis).

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We use duration analysis to estimate the change in net worthFor that we make use of following formula Duration Gap Average duration of Assets Market value See Answer

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