What is the duration of the bank commercial loan portfolio

Reference no: EM131928328

Question: A bank has two, 3-year commercial loans with a present value of $80 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 $50 million. It requires an annual interest payment of $4.5 million. The principal of $50 million is due in 3 years. The general level of interest rates is 7%. What is the duration of the bank's commercial loan portfolio?

Reference no: EM131928328

Questions Cloud

How would you price the product that the company wants : A company that is uncertain about the exact date when it will pay or receive a foreign currency may try to negotiate with its bank a forward contract.

At what level of output will the two methods produce same : After an intensive research and development effort, two methods for producing playing cards have been identified by the Turner Company.

Diversifiable and non-diversifiable risk : A typical investment/project has both a diversifiable and non-diversifiable risk.

Acceptance or rejection of a single project : how to evaluate any strategic consideration among different projects or on deciding on how to decide the acceptance or rejection of a single project

What is the duration of the bank commercial loan portfolio : A bank has two, 3-year commercial loans with a present value of $80 million. The first is a $30 million loan that requires a single payment of $37.8 million.

What effect would a shift to a more highly leveraged : What effect would a shift to a more highly leveraged capital structure consisting of 50% long-term debt, 10% preferred stock, and 40% common stock have.

What is the amount of raw materials it used during the year : Nestlé reports beginning raw materials inventory of 3,815 and ending raw materials inventory. What is the amount of raw materials it used during the year?

Recoveries and reinsurance commission for 2017 : You were asked by the reinsurance manager to check the IT system's calculations of reinsurance premiums, recoveries and reinsurance commission for 2017.

How much will operating income increase total : If compmany sells one additional unit (at the same selling price), how much will CM $ increase (total)? How much will operating income increase (total)?

User Account

All Pages