Discuss impact each of following will have in general on


EVE sensitivity to interest rate changes

Discuss the impact each of the following will have, in general, on EVE sensitivity to a change in interest rates. Consider two cases where rates rise sharply and fall sharply.

(a) Bank owns a high percentage of assets in bonds that are callable anytime after 3-months:

(b) Banks pays below-market rates on time deposits and market interest rates move sharply higher:

(c) A large percentage of the bank’s assets are in 30-year fixed rate mortgages:

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Financial Management: Discuss impact each of following will have in general on
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