Question

1. T 20) Which of the following financial intermediaries are depository institutions? A) A credit union B) A savings and loan association O A commercial bank D) All of the above E) Only A and C of the above SHORT ANSWER. Write your answer in the space provided or on a separate sheet of paper. 21) A manager holds a portfolio that is invested 25% in a bond with 5-year duration and 75% in a bond with 10-year duration. What is the duration of the portfolio? (6p) 22) Maria would like to make a single investment and have $1 million at the time of her retirement in She has found a mutual fund that will earn 6 percent annually. How much will Maria havet

Answer 1

Solution:

Question 20. )

Depository Institutions are those institutions that are allowed to take the deposits from the public and commercial banks, credit union and A saving and loan associations all are allowed to take deposits.

Hence correct option is D) All of the above

Question 21. )

It is given that the W1 = 0.25 and D1 = 5 Years, W2 = 0.75, D2 = 10 Years

Portfolio Duration = W1 * D1 + W2*D2 = 0.25*5 +0.75 * 10 = 1.25 + 7.5 = 8.75

Question 22 is not completely visible