Re-pricing gap and percentage gap.

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Answer 1

Question

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

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You are called in as a financial analyst to appraise the bonds of Ollie’s Walking Stick Stores. The $5,000 par value bonds have a quoted annual interest rate of 8 percent, which is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 12 years to maturity. a. Compute the price of the bonds based on semiannual analysis. b. With 8 years to maturity, if yield to maturity goes down substantially to 6 percent, what will be the new price of the bonds?

Lonnie is considering an investment in the Cat Food Industries. The $10,000 par value bonds have a quoted annual interest rate of 12 percent and the interest is paid semiannually. The yield to maturity on the bonds is 14 percent annual interest. There are seven years to maturity. Compute the price of the bonds based on semiannual analysis.

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Answer 2

Question

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

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Answer 3

Question

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

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Answer 4

Question

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

Expert Solution & Answer

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Answer 5

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

Answer 6

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

Answer 7

Chapter 22, Problem 5P

a)

Summary Introduction

To determine: Re-pricing gap and percentage gap.

Answer 8

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

Answer 9

b)

Summary Introduction

To determine: Changes in bank’s interest income, interest expense and net interest income.

Answer 10

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

Answer 11

c)

Summary Introduction

To determine: The way CGAP and spread impact affected net interest earnings interest income.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 22 - Prob. 1DYU Ch. 22 - Prob. 2DYU Ch. 22 - Prob. 3DYU Ch. 22 - Prob. 4DYU Ch. 22 - Prob. 5DYU Ch. 22 - Prob. 6DYU Ch. 22 - Prob. 7DYU Ch. 22 - Prob. 8DYU Ch. 22 - Prob. 9DYU Ch. 22 - Prob. 10DYU

Re-pricing gap and percentage gap.

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To determine: Re-pricing gap and percentage gap.

To determine: Changes in bank’s interest income, interest expense and net interest income.

To determine: The way CGAP and spread impact affected net interest earnings interest income.

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