Computation of the duration of a commercial loan

Assignment Help Finance Basics

Reference no: EM13827737

Problem:

Assets

Par

Amount

Rate

Liabilities

Par

Amount

Rate

2-year commercial loans, annual fixed rate, at par

$400 million

10 %

1-year CDs, annual fixed rate, at par

$450 million

7 %

1-Year Treasury bills

$100 million

Net Worth

$50 million

1. What is the duration of the commercial loans?

a. 1.00 years.

b. 2.00 years.

c. 1.73 years.

d. 1.91 years.

e. 1.50 years.

2. What is the FI's leverage-adjusted duration gap?

a. 0.91 years.

b. 0.83 years.

c. 0.73 years.

d. 0.50 years.

e. 0 years.

Summary of problem:

These short questions is from Finance as well as the questions are about computation of the duration of a commercial loan as well as leverage adjusted duration gap for bank with the given data.

Reference no: EM13827737

Questions Cloud

Changing interest rates and duration of assets-liabilities : The following information is about current spot rates for an FI's assets (loans) and liabilities (CDs). All interest rates are fixed and paid annually.

Type of measurement scale : List 4 variables that you might assess in a research project related to your research area. List one for each type of measurement scale: Nominal, ordinal, interval, and ratio

Internet marketing case study analysis : Internet Marketing Case Study Analysis

Analyze the importance of trust in developing relationships : The question is related to Sociology and it is explain the importance of trust in developing with parents. This has been explained in the answer.

Computation of the duration of a commercial loan : These short questions is from Finance as well as the questions are about computation of the duration of a commercial loan as well as leverage adjusted duration gap for bank with the given data.

Discuss about creating alternate hypothesis : The question belongs to Basic Statistics and it discuss about creating alternate hypothesis for null hypothesis in research

Analyse ethos of partnership model of working with parents : The question is related to Sociology and the question clarifies about the ethos of the partnership model for working with parents. This has been analyzed in the answer.

Correlation research : Briefly describe whether you think your area of interest is more conducive to experimental or correlation research. What are the costs/benefits of each as it relates to your research area

Computation of price of the bond : These short questions is from Finance as well as they deal with the computation of price of the bond with 1 year maturity depending on the market interest rates.

User Account

All Pages