Q 10. The duration of to be approved loan of $15 million is 4 years. The increase in credit risk premium for bonds belonging to the same risk category of the loan has been estimated to be 4.5 per cent. What is the capital at risk if the current average level of interest rates for this category of bonds is 10 percent? a) $357,142.86 b) $1,789,565
Q 10. The duration of to be approved loan of $15 million is 4 years. The increase in credit risk premium for bonds belonging to the same risk category of the loan has been estimated to be 4.5 per cent. What is the capital at risk if the current average level of interest rates for this category of bonds is 10 percent? a) $357,142.86 b) $1,789,565
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q 10. The duration of to be approved loan of $15 million is 4 years. The increase in credit risk premium for bonds belonging to the same risk category of the loan has been estimated to be 4.5 per cent. What is the capital at risk if the current average level of interest rates for this category of bonds is 10 percent?
a) $357,142.86
b) $1,789,565
c) $2,454,545.45
d) $2,755,357.14
e) $1,964,285.71
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