If the manager of the Friendly Finance Company decides to sell off $10 million of the companys

Question:

If the manager of the Friendly Finance Company decides to sell off $10 million of the company’s consumer loans, half maturing within one year and half maturing in greater than two years, and uses the resulting funds to buy $10 million of Treasury bills, what is the income gap for the company? What will happen to profits next year if interest rates fall by 5 percentage points? How could the Friendly Finance Company alter its to immunize its income from this change in interest rates?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...