Using the below information, calculate: Assets Cash Amount $75 million Rate Duration Loans $750 million 12 percent 1.75 years Treasuries $175 million 9 percent 7.00 years Liabilities and Equity Time Deposits $350 million 7 percent 1.75 years CDs $575 million 8 percent 2.50 years Equity $75 million The duration of the assets to four decimal places. The duration of the liabilities to four decimal places. If all interest rates decline 90 basis points (AR/(1 + R) = −90 basis points), what is the change in the market value of equity?
Using the below information, calculate: Assets Cash Amount $75 million Rate Duration Loans $750 million 12 percent 1.75 years Treasuries $175 million 9 percent 7.00 years Liabilities and Equity Time Deposits $350 million 7 percent 1.75 years CDs $575 million 8 percent 2.50 years Equity $75 million The duration of the assets to four decimal places. The duration of the liabilities to four decimal places. If all interest rates decline 90 basis points (AR/(1 + R) = −90 basis points), what is the change in the market value of 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
Related questions
Question
-
The duration of the assets to four decimal places:
Cash: 0.0000 years
Loans: 1.7500 years
Treasuries: 7.0000 years -
The duration of the liabilities to four decimal places:
Time Deposits: 1.7500 years
CDs: 2.5000 years
Equity: Not provided -
If all interest rates decline 90 basis points (ΔR/(1 + R) = -90 basis points), the change in the market value of equity can be calculated as follows:
Transcribed Image Text:Using the below information, calculate:
Assets
Cash
Amount
$75 million
Rate
Duration
Loans
$750 million
12 percent
1.75 years
Treasuries
$175 million
9 percent
7.00 years
Liabilities and Equity
Time Deposits
$350 million
7 percent
1.75 years
CDs
$575 million
8 percent
2.50 years
Equity
$75 million
The duration of the assets to four decimal places.
The duration of the liabilities to four decimal places.
If all interest rates decline 90 basis points (AR/(1 + R) = −90 basis points), what is
the change in the market value of equity?
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