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Does the current situation accomplish this objective

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Question - Motorhead Credit has 15 bil in assets & liabilities = $12 bil. The Macaulay duration of the assets are 2.5 years. The Macaulay duration of the liabilities is 6 years.

a. Management's objective is to immunize its net equity exposure against interest rates. Does the current situation accomplish this objective? Why or why not?

b. Motorhead Credit would like to immunize its net equity position by restructuring 8 billion of its liabilities. What is the required duration of the eight billion dollar portion of the liabilities in order to immunize its net equity position?

Reference no: EM132938602

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