Questions from Financial Markets

Q: An investment fund has $1 million in cash and $9

An investment fund has $1 million in cash and $9 million invested in securities. It currently has 1 million shares outstanding. a. What is the NAV of this fund? b. Assume that some of the shareholders...

Q: Calculate the re pricing gap and impact on net interest income of

Calculate the re pricing gap and impact on net interest income of a 1 percent increase in interest rates for the following positions: a. Rate-sensitive assets = $100 million; Rate-sensitive liabilitie...

Q: An insurance company issued a $90 million one-year,

An insurance company issued a $90 million one-year, zero coupon note at 8 percent add-on annual interest (paying one coupon at the end of the year) and used the proceeds plus $10 million in equity to...

Q: Use the following balance sheet information to answer this question.

Use the following balance sheet information to answer this question. a. What is the average duration of all the assets? b. What is the average duration of all the liabilities? c. What is the FI&acir...

Q: Two banks are being examined by regulators to determine the interest rate

Two banks are being examined by regulators to determine the interest rate sensitivity of their balance sheets. Bank A has assets composed solely of a 10-year $1 million loan with a coupon rate and yie...

Q: Consider the following balance sheet positions for a financial institution: (

Consider the following balance sheet positions for a financial institution: (LG 22-1) Rate-sensitive assets = $200 million; Rate-sensitive liabilities = $100 million. Rate-sensitive assets = $100 mill...

Q: Consider the following balance sheet for Watch over Savings Inc. (

Consider the following balance sheet for Watch over Savings Inc. (in millions): a. What is Watch over’s expected net interest income at year-end? b. What will be the ne...

Q: Consider the following balance sheet for Watchovia Bank (in millions):

Consider the following balance sheet for Watchovia Bank (in millions): a. What is Watchovia’s expected net interest income at year-end? b. What will net interest income...

Q: Hedge Row Bank has the following balance sheet (in millions):

Hedge Row Bank has the following balance sheet (in millions): The duration of the assets is six years and the duration of the liabilities is four years. The bank is expecting interest rates to fall...

Q: A bank has the following balance sheet: /

A bank has the following balance sheet: Suppose interest rates rise such that the average yield on rate-sensitive assets increases by 45 basis points and the average yield on rate-sensitive liabilit...