Fixed-rate mortgages with average interest rate

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A savings institution (SI) has funded $12 million of 30-year fixed-rate mortgages with an average interest rate of 5.75%. These assets are funded with time deposits with an average maturity of six months. The deposits are currently paying 3.50%. In six months' time, however, the Fed has raised interest rates twice and the depositors now must be paid 4.25% a) What will happen to the SI's ROA and NIM? *Explain and show effects on ROA and NIM* b) How would your answer change if the SI normally sells the mortgages every 6 months and originates additional new mortgage loans? *Explain and show this effect* 

Reference no: EM131176577

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