Suppose that a savings institution has an average asset duration of 2.5 years and an average liability
Question:
Suppose that a savings institution has an average asset duration of 2.5 years and an average liability duration of 3.0 years. If the savings institution holds total assets of $560 million and total liabilities of $467 million, does it have a significant leverage-adjusted duration gap? If interest rates rise, what will happen to the value of its net worth?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 85% (7 reviews)
This bank has a very slight negative duration gap so small in fact that ...View the full answer
Answered By
Muhammad Khurram
I have strong General Management skills to apply in your projects. Over last 3 years, I have acquired great knowledge of Accounting, Auditing, Microsoft Excel, Microsoft PowerPoint, Finance, Microsoft Project, Taxation, Strategic Management, Human Resource, Financial Planning, Business Planning, Microsoft Word, International Business, Entrepreneurship, General Management, Business Mathematics, Advertising, Marketing, Supply Chain, and E-commerce. I can guarantee professional services with accuracy.
4.80+
249+ Reviews
407+ Question Solved
Related Book For
Bank Management and Financial Services
ISBN: 978-0078034671
9th edition
Authors: Peter Rose, Sylvia Hudgins
Question Posted:
Students also viewed these Banking questions
-
Conway Thrift Association reports an average asset duration of 7 years and an average liability duration of 4 years. In its latest financial report, the association recorded total assets of $1.8...
-
Suppose that a savings and loan association buys an interest-rate cap that has these terms: The reference rate is the 6-month Treasury bill rate; the cap will last for five years; payment is...
-
Suppose that a savings and loan association has decided to invest in mortgage-backed securities and is considering the following two securities: (i) a Freddie Mac pass-through security with a WAM of...
-
Data collected at elementary schools in DeKalb County, GA suggest that each year roughly 25% of students miss exactly one day of school, 15% miss 2 days, and 28% miss 3 or more days due to sickness....
-
Use Algorithm 4.6 with n = m = p = 2 to approximate the following triple integrals, and compare the results to the exact answers. 0 1 0 y dz dy dx z dz dy dx r-y sin y d: dy da Jo Jo Jo )
-
Determine the circular convolution of the Using the time-domain formula in(5.2.39) x; (n) = (1, 2, 3, 1} x2(n) = (4. 3, 2, 2) N-1 >1(n)x2((m- n))N m = 0, 1, .... N - 1 k3(m) = (5.2.39)
-
Imagine putting a single and a double brick on a flat board, as in Figure 10.40, and then slowly raising one end of the board. (a) Does the single brick begin to slide before, after, or at the same...
-
1. Where do ecomagination and healthymagination fit on the core competence market matrix for GE? (Exhibit) 2. Take either the energy or health care industry and draw the industry value chain. What...
-
29. If A 21+j+k and B=1+2j+2k, find the magnitude of component of (A+B) along B: (1) 4 unit (2) 5 unit (3) 6 unit (4) 7 unit 30. Which of the following group of forces cannot produce the resultant of...
-
Buckshot Electronics is a chain of electronics superstores that is located throughout California. They have 15 locations concentrated primarily in heavily populated areas. They sell thousands of...
-
What are the principal limitations of duration gap analysis? Can you think of some way of reducing the impact of these limitations?
-
Stilwater Bank and Trust Company has an average asset duration of 3.25 years and an average liability duration of 1.75 years. Its liabilities amount to $485 million, while its assets total $512...
-
For married couples living in a certain suburb, the probability that the husband will vote on a bond referendum is 0.21, the probability that his wife will vote in the referendum is 0.28, and the...
-
The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. * Calculate the required rate of return on a security with a beta of 1.25. (Do not round intermediate...
-
Imagine it is January, 2022, and you hold 10,000 shares of Apple Inc. (ticker symbol: AAPL) and you are considering entering into a covered call writing strategy. You gather the following...
-
You are given the demand and forecast history for a pillow sold at a department store. According to this, what is the 3-period weighted moving average forecast for Week 9 with weights 1,3,4? (Use the...
-
The flow of manufacturing costs through the ledger of Able Mfg . Co . during April is summarized in the following T accounts. Certain amounts have been omitted and are represented by question marks....
-
You have been asked to value the assets of a privately-held company. You used the Capital Asset Pricing Model to estimate the equity betas for every firm in the industry and then computed the average...
-
If audit scope is restricted partially what form of report might be made?
-
A manufacturer can sell product 1 at a profit of $20 per unit and product 2 at a profit of $40 per unit. Three units of raw material are needed to manufacture one unit of product 1, and six units of...
-
A Consider the nonlinear model \[dot{x}+a x|x|=e^{-2 t / 3} \sin t, \quad x(0)=0.3, \quad 0 \leq t \leq 15\] where \(a\) is a parameter. Use the RK4 method to plot the response \(x(t)\) for...
-
Provide arguments for why you think the financial crisis of 2007-2009 did or did not compromise the independence of the Federal Reserve.
-
Suppose in an election year, the economy started to slow down. At the same time, clear signs of inflationary pressures were apparent. How might the central bank with a primary goal of price stability...
-
Assuming that they could, which of the following governments do you think would be more likely to pursue policies that would seriously hinder the central banks pursuit of low and stable inflation?...
-
What PR objective(s) do you think that Trader Joes expected to reach through this campaign? And why do you think so? (cue: please be aware of the differences between PR and advertising, journalism,...
-
I need an actual proposal to outline a problem that you want to solve and how you will use data mining techniques to solve it. A business problem from your work would be a likely candidate but it...
-
How do environmental degradation and resource exploitation intersect with the processes of globalization, and what measures are necessary to ensure sustainable development in a globalized world?
Study smarter with the SolutionInn App