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Suppose that North bank currently charges a 3.5% fixed interest rate on a 15-year mortgage and pays a 2.0% interest rate to customers who buy 6-month CDs. Suppose that at the end of the six-month period depositors roll over the funds in the CD for another six months. Then the interest rate spread is.
Suppose now that market interest rates increase by 0.4%. This means that North bank has to pay a interest rate on CDs when they mature, while charging interest rate on the 15-year mortgages.
What will happen to the interest rate spread?
It decreases to 1.1% and the North bank's interest income falls.
It becomes equal to 2.4% and the North bank's interest income rises.
It decreases to 1.1% and the North bank's interest income rises.
It increases to 2.0% and the North bank's interest income falls.
If the beta of Microsoft is 1.11, risk-free rate is 3% and the market risk premium is 8%, calculate the expected return for Microsoft.
You have just turned 22, and you intend to start saving for your retirement. You plan to retire in 41 years when you turn 63. During your retirement you would like to have an nnual income of $165,000 per year for the next 28 years (until age 91)..
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andrews wonderful parents established a college savings plan for him when he was born. they deposited 50 into the
Describe the purpose of the report and provide a conclusion. An introduction and a conclusion are important because many busy individuals in the business environment may only read the first and the last paragraph.
How can we revise the FCF model by using market comparables and multiples to make it hit corporate targets we might have? For example, we might want to see what assumptions might justify the market's value on a stock -- how can we use the model co..
Use the Black- Scholes model to calculate the total cost of the collar that Marie is interested in buying. What is the effect of the collar?
The Ford Motor Company is considering three mutually exclusive electronic stability control systems for protection against rollover of its automobiles.
The project's cost and expected annual cash flows would be the same whether the project is delayed or not. The project's WACC is 11.0%. What is the value (in thousands) of the option to delay the project?
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