5-point question Given the following 4 scenarios: 1. A…
5-point question Given the following 4 scenarios: 1. A contract interest rate of 5.5% and the expected inflation rate was .5%. 2. A contract interest rate of 12% and the expected inflation rate was 4.5%. 3. A contract interest rate of 7.5% and the expected inflation rate was 6%. 4. A contract interest rate of 9% and the expected inflation rate was 5%. a) Indicate which ex ante scenario would have been best for the borrower and explain why it is best for the borrower. b) With an ex post actual inflation rate of 1%, indicate which scenario would have been best for society and explain why it is best for society of the four options.
Read Details10-point question Given the following bank information (in m…
10-point question Given the following bank information (in millions of $):Demand Deposits = $4 Variable rate mortgage loans = $14Treasury bills = $15 Fed Funds borrowing = $4Money Market deposit accts. = $14 Fixed rate CD’s = $16Fed Funds Lending = $5 Reserves = $5 Treasury bonds = $10 Fixed rate loans = $21 Discount Loans = $2 Variable rate CD’s = $9 Savings deposits = $9 Equity Capital = $12A. Develop a balance sheet from the above data. Be sure to divide your balance sheet into rate-sensitive assets and liabilities as we did in class and in the examples.B. Perform a Standard Gap Analysis and a Duration Analysis using the above data if you have a 1.15% increase in interest rates and an average duration of assets of 8.2 years and an average duration of liabilities of 6.1 years.C. Determine the new level of equity capital.
Read Details5-point question Evaluate which of the following options wou…
5-point question Evaluate which of the following options would be your best investment based solely on the yield to maturity criterion. Option #1: Purchase a $35,000 discount bond selling for $24,100 and maturing in 7 years. Option #2: Purchase a $10,000 coupon bond with a 4.5% coupon rate selling for $10,350 and maturing in 7 years.
Read DetailsPart II: REQUIRED Monetary Aggregate Problem @ 24 points. Sh…
Part II: REQUIRED Monetary Aggregate Problem @ 24 points. Show all work for credit and carry all fractions to at least five decimal places. Work must be legible for credit. Select yes if you understand the instructions, and continue the exam.
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