Please answer the following questions.
I put -9.20%, but it says it's wrong.
Net worth = assets - liabilities
Change in net worth = change in assets - change in liabilities
= 100 million x - 4% x 4 - (85 million x - 4% x 2)
= -9.2 million
% decline in net worth as a percentage of assets = 9.2 x 100 / 100 = 9.2%
Try a positive value of 9.2 %.
Please answer the following questions. I put -9.20%, but it says it's wrong. Suppose First National...
(2.)Suppose the First National Bank of Duluth has $500.00 million in total assets with an average asset duration offive years. Assume that the bank’s liabilities are comprisedof $86.75 million of demand deposits and $163.75 million inbonds with a 4.00% coupon rate (which pays annually) and a fiveyear time-to-maturity. Further assume that currentmarket interest rates are at 9.00% per annum. (a.)(2 point) Calculate the duration of the bank’s bonds.
Suppose the First National Bank of Duluth has $500.00 million in total assets with an average asset duration of five years. Assume that the bank’s liabilities are comprised of $86.75 million of demand deposits and $163.75 million in bonds with a 4.00% coupon rate (which pays annually) and a five year time-to-maturity. Further assume that current market interest rates are at 9.00% per annum. What is this bank’s duration gap? Is the bank asset- or liability-sensitive?
Suppose you are the manager of a bank whose $100 billion of assets have an average duration of four years and whose $90 billion of liabilities have an average duration of six years. Conduct a duration analysis for the bank, and show what will happen to the net worth of the bank if interest rates rise by 2 percentage points. What actions could you take to reduce the bank's interest-rate risk?
3. Refer to First National Bank's balance sheet with durations. Assume all values are market values. Duration of First National Bank's Assets | Amount ($ millions) | Duration (years) Reserves and cash items 00 Securities: Less than 1 year 0.4 1 to 2 years 1.6 Greater than 2 years 70 Residential Mortgages Variable rate 0.5 Fixed rate (30 year) 6.0 Commercial loans Less than 1 year 0.7 1 to 2 years 1.4 Greater than 2 years Duration of First National...
QUESTION 29 3 points Save Answer Suppose that the first national bank currently holds a total of 39 million dollars in deposits from over 120,000 clients. At the same time, the total amount of loans people owe the bank is 10 million dollars. Assume that the bank currently has 2 million dollars in cash and 2 million dollars worth of securities invested in the financial market. The bank also owns some physical assets, such as its office building. Suppose the...
*Please help to answer these questions correct it if it's wrong, thank you!!* QUESTION 50 If a banking system receives $100 of new cash deposits, the maximum ultimate change in lending will equal if the reserve requirement is 5%. QUESTION 51 Suppose that the country of Gizmovia wants to maintain the exchange rate of its currency, the gizmo, at $0.50, but the current equilibrium exchange rate for the gizmo is $0.75. If Gizmovia uses monetary policy to bring the exchange...
First Duration Bank has the following assets and liabilities on its balance sheet. What is the duration of the commercial loans? First Duration Bank has the following assets and liabilities on its balance sheet Rate Liabilities Par Amount $450 million 70 Par Amount 2-year commercial $400 million loans al fired rate at par 1-year Treasury bulls S100 million 10°. I ar CDs al feed raalpur Net Worth $50 million 7. What is the duration of the commercial loans? A 1.00...
please, don't pay attention to the lines in the graph. I know it's wrong. 90- SLF HIYO UWODOU VITUGUIG ITUO HUU UGUI GUID funds in an economy Suppose the government has a budget deficit of $0 2 trillion and the Ricardo-Barro effect holds. Draw the new demand for loanable funds curve. Label it Draw the new supply of loanable funds curve. Label it Draw a point that shows the equilibrium quantity of loanable funds and interest rate. 20- SUF 7.04...
37. If interest rates are projected for the next five years to be 5%,6%,7%,5% and 7% and the term premium on a 5 year bond is 1% then the interest rate on a 5 year bond is A. 6% B. 6.5% C.7% D. none of the previous CHAPTER 9: Banking & the management of financial institutions 38. A balance sheet indicates insolvency when A. Its capital exceeds its liabilities B. Its assets exceeds its liabilities C. Its liabilities exceeds its...
Hello! Could you please answer all questions? I think the ones I put in blue are correct but I am not too sure. QUESTION 7 Suppose people expect inflation to be 3 percent during the next several years. When the real interest rate is 5 percent, the money, or nominal interest rate, will be a. 1 percent. b. 7 percent. c. 4 percent. d. 8 percent. QUESTION 8 The idea that people like to work more for higher wages, but...