What actions should the bank manager take

Reference no: EM132192712

Question: Bank AAA has $15 million of fixed-rate assets, $30 million of rate-sensitive assets, $25 million of fixed-rate liabilities, $20 million of rate-sensitive liabilities, 5 million of demand deposit, 10 million of securities, and 0.6 million of reserves. Assume that the required reserve is 10%.

1. What would happen if the interest rates fall by 5%?

2. What actions should the bank manager take if interest rates are expected to fall?

Reference no: EM132192712

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