What is the duration of equity

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ASSETS

Cash reserves $50 / 0 YEARS

Autoloans $100 / 2 YEARS

Mortgages $150 / 7 YEARS

TOTAL ASSETS $300

LIABILITIES

Checking and savings $80 / 0 YEARS

GICS $100 / 2 YEARS

Long-term financing $100 / 10 YEARS

TOTAL LIABILITIES 280

EQUITY $20

TOTAL LIABILITIES AND EQUITY $300

1) What is the duration of equity?

2) Rash and mortgages prepayments reduced mortgages from 150 to 100. What is the duration of equity?

3) If interest rates fall from 4 percent to 3 percent, what is the chage in the value of equity?

4) After mortgage decrease to 100 but before change in interest rate, what amount of long term bonds should be bought to eliminate interest risk?

Reference no: EM131519761

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