kylediedrich1343
kylediedrich1343
05.05.2020 • 
Business

DI has assets of $13 million consisting of $3 million in cash and $10 million in loans. It has core deposits of $5 million. It also has $4 million in subordinated debt and $4 million in equity. Increases in interest rates are expected to result in a net drain of $2 million in core deposits over the year. a-1. The average cost of deposits is 4 percent and the average yield on loans is 7 percent. The DI decides to reduce its loan portfolio to offset this expected decline in deposits. What is the cost to the firm from this strategy after the drain

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