Question
ABC Bank Ltd has extended a Rs.10 crore loan at 5% over
the repo rate. The loan is to be repaid in equal quarterly instalments. The bank’s funding of the loan is to be done by 5 years deposit, interest rate on it being 6.5%. Which of the following risk associated with this transaction can lead to variation in the bank’s net interest income in one year?Solution
Repricing risk is the risk of changes in interest rate charged (earned) at the time a financial contract's rate is reset . Here the interest on the loan extended (asset) is variable while that on the deposits (liability) is fixed. Any change in the interest rate will impact the net interest income by repricing of the loan of the bank and changing the net spread between interest earned and interest paid.
A man invested a certain amount of sum at 15% per annum simple interest and earned an interest of Rs.2100 after 2 years. If the same amount is invested ...
A sum of money grows to Rs. 3,640 in 6 years and Rs. 4,120 in 8 years under simple interest. What is the original principal amount?
What sum of money must be given at simple interest for 8 months at 4% per annum in order to earn Rs. 320 interest?
Compound interest on a certain sum of money for 2 years is Rs.6800 while the simple interest on the same sum for the same time period is Rs.6400. Find t...
A sum of Rs.6,000 is to be paid back in two equal annual instalments; each instalment is to be paid at the end of every year. How much is each instalme...
Calculate the final amount Poonam will receive if she invests Rs. 2,500 at a compound interest rate of 80% per annum, compounded quarterly, over a perio...
An amount becomes five times of itself in 40 years at simple interest. Find the value of (3R + 10), where R is the rate of interest per annum.
The simple interest on Rs. ‘p’ at 15% p.a. for 2 years is 450 more than the simple interest on Rs. (p + 1000) at 10% p.a. for 2.5 years. Find the co...
Find the rate of simple interest at which Rs. 6000 should be invested for 2 years so that the interest earned will be same as the interest received when...
- Sanjay invested Rs. ‘x’ at the rate of 14% simple interest for 2 years, while Manish invested 50% of x at 12% compound interest per annum for 2 years. ...
