What is the current value of obligation

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Assignment

1. Prepare a Statement of Financial Position of Jeddah Financial Corporation from the following details:

Cash

518,161

Federal Funds Sold and other investments

1,321,626

Advanced from Federal Home Loans

38,961,165

Securities Available for sale, at fair value

382,499

Securities sold under agreements to repurchase

5,000,000

Senior Debts

8,194,266

Loans held for sale

83,365

Mortgage backed securities with recourse held to maturity, at cost

1,168,480

Interest earned but uncollected

392,303

Premises and Equipment, net

403,084

Other Assets

?

Loans Held for Investment

117,798,600

Common Stock

30,804

Additional Paid in Capital

338,997

Retained Earnings

81,408,185

2. Dammam West Bank has an obligation to pay a fixed nominal amount of $ 150, 8 years from today. Assume that the appropriate annual interest rate for this instrument, denoted r, is currently 10%. Answer the following questions:

a) What is the current value of obligation
b) What will the value of obligating if the rate of interest is increased by 4%
c) What will be value of obligation if the rate of interest is decreased by 2%

3. For a bank to accept credit risk, it must expect to be paid either interest at a sufficiently large premium above the risk-free rate or an actuarially fair fee. Considering this fact, how will you determine credit risk premium.

Reference no: EM131694065

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