What is the present value of each cash flow discounted

Reference no: EM133559426

Discussion Post

A. Explain the major source of risk exposure resulting from the issuance of standby letters of credit.

B. Discuss what is the duration of all floating rate debt instruments.

Case

A. What is the difference between book value accounting and market value accounting? How do interest rate changes affect the value of bank assets and liabilities under the two methods? What is marking to market?

B. What are the two different general interpretations of the concept of duration, and what is the technical definition of this term? How does duration differ from maturity?

C. A one-year, $100,000 loan carries a coupon rate and a market interest rate of 12 percent. The loan requires payment of accrued interest and one-half of the principal at the end of six months. The remaining principal and accrued interest are due at the end of the year.

1. What will be the cash flows at the end of six months and at the end of the year?

2. What is the present value of each cash flow discounted at the market rate? What is the total present value?

3. What proportion of the total present value of cash flows occurs at the end of six months? What proportion occurs at the end of the year?

4. What is the duration of this loan?

Summary

Write and submit a brief summary of the important concepts learned during the week. The summary will include a summary of the instructor's weekly lecture including any videos included in the lecture.

Reference no: EM133559426

Questions Cloud

Describe your plan to conduct job analysis for each job : Describe your plan to conduct job analysis for each job title, and provide a job description for each job title. You will find it useful to discuss what type

Operating buildings for canadian climatic condition : How is fundamental science involved in constructing and operating buildings for Canadian climatic condition?

Write up your brainstorming ideas for each concept : Write up your brainstorming ideas in at least one paragraph for each concept. Include in your paragraph the How, what, where, and why for each idea.

Why is reproduction required characteristic of all living : If an organism could remain healthy and function for it's whole life without having offspring, then why is reproduction a required characteristic of all living

What is the present value of each cash flow discounted : What is the present value of each cash flow discounted at the market rate? What is the total present value? What is the duration of this loan?

Promote sustainable local food systems : What are some ways that you can promote sustainable local food systems?

How you think you may apply your learnings in the future : Reflect on what you actually learned by listening to the lectures from the University instructors and guest speakers, reading the required materials

Developed countries is challenge to carbon mitigation : Describe how aging society in developed countries is a challenge to carbon mitigation.

Do you feel transformational leaders or transactional leader : Do you feel transformational leaders or transactional leaders are more effective? Explain. What do you feel are some disadvantages to transformational

User Account

All Pages