Effects of interest on the bank net income, Financial Accounting

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Effects of interest on the bank net income

Response to the following problem:

If a bank invested $50 million in a two-year asset paying 10 percent interest per year and simultaneously issued a $50 million one-year liability paying 8 percent interest per year, what would be the impact on the bank's net interest income if, at the end of the first year, all interest rates increased by 1 percentage point?

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Financial Accounting: Effects of interest on the bank net income

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