QUESTION FOUR (4) a) Suppose that it is JUNE 2022. COCOBOD sells 800,000 tons of premium cocoa at $2,400 for delivery to Cadbury in JUNE 2023. Under what circumstances will the short and the long positions make a profit? Draw a diagram showing how the profit on a long position and a short position vary with the price of the underlying asset at maturity. b) Consider a simplified balance sheet of a financial institution as below: Assets 1. Short-term consumer loans (one year maturity) 2. Long-term consumer loans (two-year maturity) Liabilities GHS50 1. Equity capital(fixed) GHS20 25 2. Demand deposits 40 3. Three-month Treasury bills 4. Six-month Treasury notes 30 3. Passbook savings 35 4. Three-month CDs 424 30 40 5. Three-year Treasury bonds 70 5. Three-month bankers' acceptances 20 20 6. Six-month commercial 6. 10-year fixed-rate mortgages 20 paper 60 7. 30-year floating-rate mortgages (rate adjusted every nine months) 40 7. One-year time deposits 20 8. Two y me deposits 40 270 270 3 Calculate the following iTotal one-year rate-sensitive assets Total one-year rate-sensitive lubilities The cumulative one-year repricing gap (CAP) for tank

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter14: Distributions To Shareholders:dividends And Share Repurchases
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QUESTION FOUR (4)
a) Suppose that it is JUNE 2022. COCOBOD sells 800,000 tons of premium cocoa
at $2,400 for delivery to Cadbury in JUNE 2023. Under what circumstances will
the short and the long positions make a profit? Draw a diagram showing how the
profit on a long position and a short position vary with the price of the underlying
asset
at
maturity.
b) Consider a simplified balance sheet of a financial institution as below:
Assets
1. Short-term consumer loans
(one year maturity)
2. Long-term consumer loans
(two-year maturity)
Liabilities
GHS50
1. Equity capital(fixed)
GHS20
25
2. Demand deposits
40
3. Three-month Treasury bills
4. Six-month Treasury notes
30
3. Passbook savings
35
4. Three-month CDs
424
30
40
5. Three-year Treasury bonds
70
5. Three-month bankers'
acceptances
20
20
6. Six-month commercial
6. 10-year fixed-rate mortgages
20
paper
60
7. 30-year floating-rate
mortgages (rate adjusted every
nine months)
40
7. One-year time deposits
20
8. Two y me deposits
40
270
270
3
Calculate the following
iTotal one-year rate-sensitive assets
Total one-year rate-sensitive lubilities
The cumulative one-year repricing gap (CAP) for tank
Transcribed Image Text:QUESTION FOUR (4) a) Suppose that it is JUNE 2022. COCOBOD sells 800,000 tons of premium cocoa at $2,400 for delivery to Cadbury in JUNE 2023. Under what circumstances will the short and the long positions make a profit? Draw a diagram showing how the profit on a long position and a short position vary with the price of the underlying asset at maturity. b) Consider a simplified balance sheet of a financial institution as below: Assets 1. Short-term consumer loans (one year maturity) 2. Long-term consumer loans (two-year maturity) Liabilities GHS50 1. Equity capital(fixed) GHS20 25 2. Demand deposits 40 3. Three-month Treasury bills 4. Six-month Treasury notes 30 3. Passbook savings 35 4. Three-month CDs 424 30 40 5. Three-year Treasury bonds 70 5. Three-month bankers' acceptances 20 20 6. Six-month commercial 6. 10-year fixed-rate mortgages 20 paper 60 7. 30-year floating-rate mortgages (rate adjusted every nine months) 40 7. One-year time deposits 20 8. Two y me deposits 40 270 270 3 Calculate the following iTotal one-year rate-sensitive assets Total one-year rate-sensitive lubilities The cumulative one-year repricing gap (CAP) for tank
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