A bank had $50 m. in subprime mortgages in 2005. It also had $9 m. in cash and reserves and it had $41 m. in C&I loans. The subprime loans had a MD of 12 and a YTM of 7%. The bank funded these assets with $85 m. in deposits, $10 m. in subordinated debt and $5 m. in equity. The sub. debt had a MD of 8 and a YTM of 5%. By 2009 the YTM on the subprime mortgage loans reached 9%. 

What was the new YTM of the sub debt in 2009?

Answer rating: 100% (QA)

To calculate the new Yield to Maturity YTM on the subordinated debt in 2009 we need to consider the ... View the full answer