What is the duration of bank commercial loan portfolio

Assignment Help Financial Management
Reference no: EM131956496

A bank has two, 3-year commercial loans with a present value of $70 million. The first is a $30 million loan that requires a single payment of $37.8 million in 3 years, with no other payments until then. The second is for $40 million. It requires an annual interest payment of $3.6 million. The principal of $40 million is due in 3 years.

a. What is the duration of the bank's commercial loan portfolio?

b. What will happen to the value of its portfolio if the general level of interest rates increased from 8% to 8.5%?

Reference no: EM131956496

Questions Cloud

How much would the margin call be : How much would the margin call be? Assume that you start with $5280 in your brokerage account.
Put option on particular stock : Assume that you want to buy a put option on a particular stock but put options are very thinly traded and have high transactions costs.
Calculate the npv for new and old machines : Pilot Plus Pens is deciding when to replace its old machine. Calculate the NPV for the new and old machines.
What is the amount of the firm total current assets : What is the amount of the firm's total current assets?
What is the duration of bank commercial loan portfolio : What is the duration of the bank's commercial loan portfolio?
What is the prevailing true annual interest rate : A perpetuity costs $100,000 and pays $1,000 per month, starting next month. What is the prevailing true annual interest rate?
Where does the ultimate responsibility rest : what are the issues related to ownership and where does the ultimate responsibility rest?
Makes consumer products for OEMs : You have been recruited as the Design Manager in an established mid-sized (300 employees) manufacturing company that makes consumer products for OEMs
How to work with these invaluable system tools : Review each other's flowcharts and share hints, comments, etc on how to work with these invaluable system tools.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd