### Interest-rate sensitive assets

##### Reference no: EM13796742

For every \$100 in assets, a bank has \$40 in interest-rate sensitive assets, and the other \$60 in non-interest-rate sensitive assets. The same bank has \$50 for every \$100 in liabilities in interest-rate sensitive liabilities, the other \$50 are in liabilities that are not interest-rate sensitive. If the interest rate on assets increases from 5 to 6 percent, and the interest rate on liabilities increases from 3 to 4 percent, analyze the impact on the bank’s profits per \$100 of assets. Show your work.

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