A customer ask a bank if it would be willing to commt to making the cusomer a
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A customer ask a bank if it would be willing to commt to making the cusomer a one year loan at an interest rate of 9% one year from now. to compensate for the costs of making the loan, the bank needs to charge one pecentage point more than the expected interest rate on a canada bond with the same maturity if it is to make a profit. If the bank manager estimates the liquidity premium to be 0.4% on a two year canada bond, and the one year canada bond rate is 6.5% and the two year bond rate is 7.5%, should be the manager be willing to make the commitent?
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
Posted Date: