FREE Trial

Long Bank has assets that consist mostly of 30-year mortgages and liabilities that are short-term demand and time deposits. Will an interest rate futures contract the bank buys add to or subtract from the banks risk?

Long Bank has assets that consist mostly of 30-year mortgages and liabilities that are short-term demand and time deposits. Will an interest rate futures contract the bank buys add to or subtract from the bank’s risk?

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!
  • Tutor Answer

The purchase of an interest rate futures contract will …View the full answer


answer-question
Related Book For  answer-question
Financial Institutions Management A Risk Management Approach

Financial Institutions Management A Risk Management Approach

ISBN: 978-0071051590

8th edition

Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders

See More Books
Posted Date: December 17, 2015 05:11:12
See More Questions

Students also viewed these Banking questions

Q:
Rainy Day Insurance Company maintains an extensive portfolio of bond investments classified as available-for-sale securities under ASC 320. The bond investments have a variety of fixed interest rates...
A:
MEMO To Mark Becker CFO From CPA Investment Division Re Hedge AccountingBond Portfolio The proposal......
Q:
What are the differences between a forward rate agreement and an interest rate futures contract? In your answer, consider both the institutional differences and the economic differences.
A:
An FRA is a forward contract that fixes an interest rate for borrowing or lending over some future t......
Q:
Chrysler LLC, the now privately held company sold-off by DaimlerChrysler, must pay floating rate interest three months from now. It wants to lock in these interest payments by buying an interest rate...
A:
Assumptions Values Interest rate futures closing price 9307 Effective y......
Q:
How does feedback value relate to predictive ability and accountability?
A:
Feedback relates to comparing actual results against......
Q:
Web Tools Company is considering using the proceeds from a new $50 million bond issue to call and retire its outstanding $50 million bond issue. The details of both bond issues are outlined in what...
A:
a Finding the Initial Investment for the Bond Refunding Decision b Finding t......
Q:
The frequency table summarizes data on the numbers of babies born on each day of the week in the United States in a recent week. Day ........................................................ Births...
A:
Individuals The objects in the set of Data is called individuals As per the given fre......
Q:
When possible, compute the truth values of the simple components in the following compound propositions. If no truth value can be computed, write a question mark (?) under the letter or letters with...
A:
Click to View...
Q:
Partnership Income and Basis Adjustments. Mark and Pamela are equal partners in MP partnership. The partnership, Mark, and Pamela are calendar year taxpayers. The partnership incurred the following...
A:
1 Computation of partners ordinary income Statement Particulars AmountIn AmountIn Sales 450000 Cost......
Q:
convert this data flow diagram into a UML sequence diagram. Equipment Specify spec. equipment required Equipment spec. Supplier database Validate specification Checked spec. Supplier list Find...
A:
Sequence Diagrams Descrips How And In What Order The O......
Q:
The elements arsenic and phosphorus are common dopants in crystalline silicon that impart semiconductor properties to it via the introduction of p-type carriers into the silicon lattice. The doping...
A:
a At 600 C the diffusion coefficient of arsenic is about 13 x 109 cm2s while that of pho......
Q:
a. What is the FIs obligation at the time the futures contract is purchased? b. If an FI purchases this contract, in what kind of hedge is it engaged? c. Assume that the Treasury bond futures price...
A:
Suppose an FI purchases a Treasury bond futures contract at 95 a The FI is obligated to take deli......
Q:
In each of the following cases, indicate whether it would be appropriate for an FI to buy or sell a forward contract to hedge the appropriate risk. a. A commercial bank plans to issue CDs in three...
A:
a The bank should sell a forward contract to protect against an i......
Q:
What is the first step to take when writing instructions?
A:
When writing instructions the first and most crucial step is to identify and understand the target a......
Q:
Banks charge customers an overdraft fee when the customer's account falls below 0. The Overdraft Protection Act of 2013 limits overdraft fees so that they are reasonably proportional to the amount of...
A:
To find the probability that more than 9 of the banks have an overdraft fee that is at most 15 we......
Q:
David took out a mortgage of $529,000 for a house and just made the 111th end of month payment. If interest on the loan was 3.6% compounded monthly and the mortgage has a period of 15 years. Round...
A:
SOLUTION To calculate Davids monthly mortgage payments and his current outstanding balance after the......
Q:
What are your thoughts concerning welfare during colonial times? From reference of the text, religion played a role to really help people understand that the poor need help, they need the community...
A:
The text you provided discusses the role of religion and the evolution of welfare during colonial times in the context of The Great Awakening and the......
Q:
If an average home in your town currently costs $300,000, and house prices are expected to grow at an average rate of 5 percent per year, what will an average house cost in 10 years? How much would...
A:
Lets calculate the future values for each scenario 1 Average House Price in 10 Years Given that the......
Q:
A company that makes environmental measuring devices has calculated their revenue and costs as follows for the most recent fiscal period: Sales Costs: Fixed Costs $200 000 Variable Costs 250 000...
A:
To calculate the breakeven point in sales dollars you can use the following formula......
Q:
Find zw and z/w Leave your answers in polar form. + i sin cos z = 2| cOS COS 10 + i sin w = 2 cos cos 10,
A:
zw2cosisin2cosisin 10 22cos......
Q:
Teasdale Inc. manufactures and sells commercial and residential security equipment. The comparative unclassified balance sheets for December 31, 2015 and 2014 are provided below. Selected missing...
A:
a 147200from table b 4680 151880 147200 from table c 151880from table Market Cost per Value per No of Share or Share or Shares or 100 of 100 of Total......
Q:
Suppose a bank enters a repurchase agreement in which it agrees to buy Treasury securities from a correspondent bank at a price of $ 24,950,000, with the promise to buy them back at a price of $...
A:
a The yield on this repo to the bank is calculated as fo......
Q:
Calculate the bond equivalent yields and the equivalent annual returns for the repurchase agreements described in Problem 14. a. Calculate the yield on the repo if it has a 7-day maturity. b....
A:
a i repo be 1031365 360 1045......
Q:
You can buy commercial paper of a major U.S. corporation for $ 495,000. The paper has a face value of $ 500,000 and is 45 days from maturity. Calculate the discount yield and bond equivalent yield on...
A:
The discount yield on the commercial paper is......
Q:
Let V = xy 2 z, calculate the energy expended in transferring a 2-C point charge from (1, 1, 2) to (2, 1, 3).
A:
W qVA......
Q:
An electric field E with an aver age magnitude of about 150 N/C points downward in the atmosphere near Earth's surface. We wish to "float" a sulfur sphere weighing 4.4 N in this field by charging the...
A:
a Since E points down and we need an upward electric force to......
Q:
An electric field E with an average magnitude of about 150 N/C points downward in the atmosphere near Earth's surface. We wish to "float" a sulfur sphere weighing 4.4 N in this field by charging the...
A:
a Since E points down and we need an upward electric force t......
Q:
Meg Bishop, vice president of supply chain at the Lilly Snack Company (see Problem 5-19) has been able to secure shipping from the proposed plant in Brevard to its plants in Wise and Cleveland for $6...
A:
tr msoheightsourceauto col msowidthsourceauto br msodataplacementsamecell style0 msonumberformatGeneral textaligngeneral verticalalignbottom whitespacenowrap msorotate0 msobackgroundsourceauto msopatt......
Q:
Consider Figure 15-1, which focuses on liquidity. How might limited acceptability of old masters paintings in exchange and difficulties in predicting the values of these paintings from year to year...
A:
While some who like paintings might accept old masters paintings in exchange o......
Q:
Wanda B. Rich is the CEO of Outlet Flooring, a discount provider of carpet, tile, wood, and laminate flooring. At the end of the year, the company's accountant provides Wanda with the following...
A:
Requirement 1 Debit Credit Bad Debt Expense 200000 Allowance for Uncollectible Account......
Q:
Use indirect truth tables to determine whether the following arguments are valid or invalid.
A:
Click to View...
Q:
A comparative balance sheet for Orozco Corporation is presented below. Additional information:1. Net income for 2012 was $105,000.2. Cash dividends of $40,000 were declared and paid.3. Bonds payable...
A:
a OROZCO CORPORATION Statement of Cash Flows For the Year Ended December 31 2012 Cash flows from ope......
Q:
When the OSHA inspection found that the endangered Workers Were illegally in the U.S. A story appeared in the national newspaper USA TODAY on June 7, 2006, regarding the vital, but illegal, immigrant...
A:
Whether illegal immigrant workers should receive the same protections under the federal Occupational Safety and Health Act OSHA as American workers an......
Q:
Read the case study and answer the question below with a one page response. What does a SWOT analysis reveal about the overall attractiveness of Under Armours situation? Founded in 1996 by former...
A:
UNDER ARMOUR EVALUATION Under Armour was founded in 1996 by current CEO Kevin Plank As an athletic apparel retailer Under Armour focuses its products and marketing efforts towards men women and youth......
Q:
Given that the electric field in a certain region is E = (z + 1) sin a, + (z + 1) cos a + sin az V/m determine the work done in moving a 4-nC charge from (a) A(1, 0, 0) to B(4, 0,0) (b) B(4, 0, 0) to...
A:
a b c d WAH......
Q:
Determine the electric field due to the following potentials: (a) V= x2 + 2y2 + 4z2 (b) V = sin(x2 + y2 + z2)1/2 (c) V = 2(z + l)sin (d) V = er sin cos 2
A:
a b c d VV......
Q:
You have begun a quality improvement campaign in your paper mill, and, as a result, lots of pieces of paper come to your desk. Each one describes a recent problem with customers according to the...
A:
a Summary percentages are as follows Problem Count Percent A 24 6316 B 4 105......
Q:
Define GDSS and list the limitations of the initial GSS software.
A:
GDSS which stands for Group Decision Support System is a type of computerbased information system that is designed to help groups of people collaborate and make decisions more effectively GDSS tools p......
Q:
Describe how collaborating robotics can be used in manufacturing.
A:
Collaborative robotics often referred to as cobots are robots designed to work alongside humans in a shared workspace They offer a range of benefits in manufacturing environments and can be used in va......
Q:
How can AI support group evaluation of ideas?
A:
AI can support group evaluation of ideas in several ways enhancing the decisionmaking process and he......
Q:
Describe an intelligent virtual personal assistant.
A:
An intelligent virtual personal assistant IVPA is a software application or program that leverages artificial intelligence AI and natural language pro......
Q:
Define group work.
A:
Group work refers to a collaborative effort in which two or more individuals w......
Q:
Use the formula for the sum of the first n terms of a geometric sequence to solve Exercises 2530. Find the sum of the first 14 terms of the geometric sequence: - 1/24, 1/12, - 1/6, 1/3, . . . .
A:
1 1 1 1 24 1......
Q:
Refer to the data in QS 10-1. Based on financial considerations alone, should Helix accept this order at the special price? Explain.
A:
Additional operating income if Helix accepts the order Per unit Total......
Q:
Multiple Choice Questions 1. The statement of cash flows reports: A) Assets, liabilities, and equity. B) Revenues, gains, expenses, and losses. C) Cash inflows and cash outflows for an accounting...
A:
1 C Cash inflows and cash outflows for an accounting period 2 E All of the above 3 C A financial st......
Q:
Multiple Choice Questions 1. Which financial statement reports assets, liabilities, and equity? a. Statement of cash flows b. Balance sheet c. Income statement d. Statement of retained earnings 2....
A:
1 b Balance sheet 2 b equity generated from......
Q:
Multiple Choice Questions 1. Financial statement analysis: A) Is the application of analytical tools to general-purpose financial statements and related data for making business decisions. B)...
A:
1 E All of the above 2 E All of the above 3 E All of the above 4 C Fi......
Q:
Explain why Soil Taxonomy is said to be a hierarchical classification system.
A:
Soil taxonomy is the science of classification and naming of soils It follows a logical structure be......
Q:
The volatility of a stock is often measured by its beta value. You can estimate the beta value of a stock by developing a simple linear regression model, using the percentage weekly change in the...
A:
a Proctor Gambles stock moves only 53 as much as the overall market......
Q:
A project has an initial cost of $18,400 and produces cash inflows of $7,200, $8,900, and $7,500 over three years, respectively. What is the discounted payback period if the required rate of return...
A:
Discounted Cash Flows Year 1 72001161 620690 Year 2 89001162 661415 Year 3 75001163 480493......
Q:
The Packers winning most of their games implies that Aaron Rodgers is a great quarterback. Translate the following statements into symbolic form using uppercase letters to represent affirmative...
A:
Click to View...
Q:
The issue had come up again and again in various management meetings and company seminars. Novartis had too many products and needed to reduce the product proliferation that had occurred. Thomas...
A:
1 In deciding whether to drop or keep Pertofran and Visergil we need to compare relevant revenues and relevant costs and not simply revenues and total costs of the products For each product relevant c......
Q:
Terry has sold equipment used in her business. She acquired the equipment three years ago for $50,000 and has recognized $30,000 of depreciation across the years in use. In order to recognize any...
A:
Lets address both scenarios Terrys Equipment Sale Terry acquired the equipment for 50000 three years......
Q:
On December 31, year 1, Eve Company leased a machine under a capital (finance) lease for a period of 10 years, contracting to pay $ 50,000 on signing the lease and $ 50,000 annually on December 31 of...
A:
Choice b is correct In this question the capital finance lease liability i......
Q:
What is a user-defined iteration control?
A:
A user defined iteration control is a type of......
Q:
How does a functional language implement repetition?
A:
In functional languages there are no for or while loopsI......
Q:
In each case, express every solution of the system as a sum of a specific solution plus a solution of the associated homogeneous system. (a) x - y - 4z = - 4 x + 2y + 5z = 2 x + y + 2z = 0 (b) 2x1 +...
A:
a Hence x t 2 y 2 3t z t that is Observe that is a solution to t......
Q:
State the accounting treatment to be adopted when the debtors and creditors are not taken over by the purchasing company when new set of books are opened.
A:
When a purchasing company does not take over the debtors accounts receivable and creditors accounts payable of the acquired company and opts to open a......
Q:
Explain the steps to be taken by a purchasing company when same set of books are Continued to record the transactions.
A:
It seems like youre asking about the steps a purchasing company should take when they continue using the same set of books to record transactions If I understand correctly youre referring to a situati......
Q:
A Ltd. agreed to collect the debts and pay the creditors on behalf of Senthil from whom the company had acquired a running business. The firms debtors and creditors totaled 1,50,000 and 50,000...
A:
Particulars Debit Credit Opening Balances Debtors Senthils 150000 Creditors Senthi......
Q:
Pass journal entries to record the following transactions in the books of XY Ltd. Name of the Purchasing Company: Name of the Vendor: Purchase price: Mode of payment of purchase price: Value of...
A:
To record the purchase of assets from Raman by XY Ltd you would need to make the......
Q:
What are the different types of debentures? Explain them in detail.
A:
Debentures are longterm debt instruments issued by companies governments or other entities to raise capital They are essentially loans that investors provide to the issuer in exchange for periodic int......
Q:
Fran Lubbs, who after a five-year stint left the corporate office of Goddard School, an early education franchise, to become a franchisee, says, Follow the system. Its one of the reasons you bought...
A:
Expect students to agree with the perspective Lubbs off......
Q:
Inexhaustible collections of ONPOs are not required to be capitalized or depreciated, if certain criteria are met. Why is this so, and what accounting and reporting recognition, if any, is required...
A:
The FASB defines collections as Works of art historical treasures or similar assets that are a......
Abnormal Psychology Clinical Perspectives On Psychological Disorders 10th Edition - ISBN: 1265407983 - Free Book