(b) Contingent Bank has the following balance sheet in market value terms (in millions of dollars):...

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(b) Contingent Bank has the following balance sheet in market value terms (in millions of dollars): Liabilities and Equity Assets Cash Mortgages $420 Deposits 920 Equity $1000 340 Total assets $1340 Total liabilities and equity $1340 In addition, the bank has purchased options on bonds with a notional value of $600 million with a delta value of 0.10. In addition, the bank has sold options on bonds with a notional value of $998 million with a delta value of 0.99. (i) What is the true stockholder net worth? (10 points) (ii) If the delta for the purchased options doubles while the delta for the sold options remains the same, would the bank's equity position improve or decline? Please explain. NB: It is not necessary to do any computations to answer this question (5 points). (b) Contingent Bank has the following balance sheet in market value terms (in millions of dollars): Liabilities and Equity Assets Cash Mortgages $420 Deposits 920 Equity $1000 340 Total assets $1340 Total liabilities and equity $1340 In addition, the bank has purchased options on bonds with a notional value of $600 million with a delta value of 0.10. In addition, the bank has sold options on bonds with a notional value of $998 million with a delta value of 0.99. (i) What is the true stockholder net worth? (10 points) (ii) If the delta for the purchased options doubles while the delta for the sold options remains the same, would the bank's equity position improve or decline? Please explain. NB: It is not necessary to do any computations to answer this question (5 points).