Discuss two ways that banks can reduce their liquidity risk

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Reference no: EM131902381

1. Define liquidity risk. Discuss two ways that banks can reduce their liquidity risk.

2. Danielle borrows $26004 to help pay for expenses. The loan is for 7 years and carries an annual rate of 3.1%. If she plans to make monthly payments, how much will she still owe after 4 years?

3. A corporate bond promises to pay $100 in one year. The bond has a default probability of .3 and its market beta is 0.3. The equity premium is 4%; the equiv- alent Treasury rate is 3%. Assume that the bonds pays out nothing in the default state. Find the appropriate bond price today.

Reference no: EM131902381

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