-Suppose Short-Term Interest Rates Increase by 1 Percent

$$\begin{array} { | l | c | c | l | c | c | } \hline \text { Assets } & \text { Amount } & \text { Rate } & \text { Liabilities } & \text { Amount } & \text { Rate } \\\hline \begin{array} { l } \text { Rate } \\\text { Sensitive }\end{array} & \$ 35,000,000 & 10 \% & \begin{array} { l } \text { Rate } \\\text { Sensitive }\end{array} & \$ 40,000,000 & 8 \% \\\hline \text { Fixed Rate } & \$ 21,000,000 & 9 \% & \text { Fixed Rate } & \$ 12,000,000 & 7 \% \\\hline \text { Non-earning } & \$ 4,000,000 & & \text { Equity } & \$ 8,000,000 & \\\hline\end{array}$$
-Suppose short-term interest rates increase by 1 percent. Calculate the change in net interest income after the interest rate increase.

A) $50,000.
B) $18,900.
C) $40,400.
D) $53,900.
E) $32,000.

Correct Answer:

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