Bank 3 Maturities Assets (millions) Liabilities (millions) 1 day +1 day-3mos +3 mos-6 mos +6 mos- 12 mos +1 year- 5 years 11 17 43 52 10 15 90 11 Use the Repricing Model. If interest rates rise by 56 basis points for assets and 142 basis points for liabilities over the next year, then how will impact the interest income of Bank 3 over the next year? O Bank 3 will experience a loss of $1,483,000 O Bank 3 will experience a gain of $679,400 O Bank 3 will experience a loss of $679,400 O Bank 3 will experience a gain of $1,953,400

Bank 3 Maturities Assets (millions) Liabilities (millions) 1 day +1 day-3mos +3 mos-6 mos +6 mos- 12 mos +1 year- 5 years 11 17 43 52 10 15 90 11 Use the Repricing Model. If interest rates rise by 56 basis points for assets and 142 basis points for liabilities over the next year, then how will impact the interest income of Bank 3 over the next year? O Bank 3 will experience a loss of $1,483,000 O Bank 3 will experience a gain of $679,400 O Bank 3 will experience a loss of $679,400 O Bank 3 will experience a gain of $1,953,400

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Q1: If a loan of 12.5 million is made for a period of 33 days at a rate of 8,25% per annum, what is the total amount repayable at the end of the period? Assume 365/365 days in the year. 12,593,236.30 12,583,236.30 10,573,287.67 10,853,25.52 which one is correct please help.
A3)
What annual interest rate do you need to find in order for a deposit of $500 to grow to $1,685 in 13 years if the bank compounds interest weekly? Select one: O a. 8.89 percent O b. 8.42 percent O c. 7.95 percent O d. 9.35 percent 0 e. 9.80 percent
(1)
Plz explain in detail asap..tysm
Solve for the number of years for each bank
4. Non annual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 11.00%; however, interest will be compounded quarterly. Complete the following table by computing the nominal (or stated), periodic, and effective interest rates for this investment opportunity. Interest Rates Nominal rate : Periodic rate Effective annual rate Clancy needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 10.00%. However, since the bank is compounding its interest semiannually, the loan will impose an effective interest rate of on his loan. Another bank is also offering favorable terms, so Clancy decides to take a loan of $15,000 from this bank. He signs the loan…
Fill in the missing values A through D in the table for a loan of $10,000, if the interest rate is compounded at 10% per year.
10. What is the amount of the quarterly deposits A such that you will be able to withdraw the amounts shown in the cash flow diagram if the interest rate is 6% compounded quarterly? The amount of the quarterly deposits A should be $ 0 6% Compounded quarterly 1 1 " (Round to the nearest dollar.) 2 1 ; 3 $1,500 4 5 1: A (Deposit) Quarters 7 6 7 . $2,300 18
12. Nonannual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. A. An investor can invest money with a particular bank and earn a stated interest rate of 6.60%; however, interest will be compounded quarterly. What are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate B. You want to invest $24,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded quarterly. What is the effective rate of return that you will earn from this investment? 6.221% 5.995% 6.014% 6.136% C. Suppose you decide to deposit $24,000 in a savings account that pays a nominal rate of 12%, but interest is…
Which of the following 4 loans has the lowest interest rate risk to the lenders? Loan 1 Loan 2 Loan 3 Loan 4 Initial Interest rate 5.00% 3.75% 4.50% 4.00% Loan Maturity (in 30 30 30 30 years) Margin above the n/a 3% 3% 3% index every Adjustment interval n/a every year every year year 1% per 3% per Interest rate cap n/a None year year Loan 1 Loan 2 Loan 3 Loan 4 O Cannot determine
Assume a bank has the following (very simplified) balance sheet. 1)Assets Mortgages Fixed rate, 15 year, annual payments, both the coupon rate and yield-to-maturity are 8% Floating rate, 15 year, rate: LIBOR + 2%, (duration = 0) 2)Liabilities Overnight deposits, rate: 0.6%, (duration = 0) 2 year CD, rate: 2%, assume it is a zero coupon 3 year CD, rate: 4%, assume it is a zero coupon 3) Assignment: Calculate weights which will immunize the portfolio. Note this is a set of weights, there is not one unique solution. You don't have to calculate the full set, just some set of weights which immunizes the portfolio. Now say you can only invest 50% of your assets in floating rate mortgages. What is the minimum amount of interest rate risk you can have? What will happen to the value of your portfolio if interest rates increase by 1%?

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