Based upon your current portfolio, would you prefer for interest rates to increase or decrease? Why? You run a finance company with $50 million in assets. Your assets include $10 million in cash (with a duration of 0), $15 million in short-term investments with a duration of 3, and $25 million in long-term investments with a duration of 12. You are financed by $30 million in debt with a duration of 14, and $20 million in equity.
Based upon your current portfolio, would you prefer for interest rates to increase or decrease? Why? You run a finance company with $50 million in assets. Your assets include $10 million in cash (with a duration of 0), $15 million in short-term investments with a duration of 3, and $25 million in long-term investments with a duration of 12. You are financed by $30 million in debt with a duration of 14, and $20 million in equity.
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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Based upon your current portfolio, would you prefer for interest rates to increase or decrease? Why?
You run a finance company with $50 million in assets. Your assets include $10 million in cash (with a duration of 0), $15 million in short-term investments with a duration of 3, and $25 million in long-term investments with a duration of 12. You are financed by $30 million in debt with a duration of 14, and $20 million in equity.
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