Question: can someone please help me with this problem, answer needs to be in millions. Like 1.567 Thanks Saved An insurance company issued a $90 million
Saved An insurance company issued a $90 million one year, zero-coupon note at 8 percent add-on annual interest (paying one coupon at the end of the year) and used the proceeds plus $10 million in equity to fund a $100 million face value, two year commercial loan at 10 percent annual interest. Immediately after these transactions were (simultaneously undertaken, all interest rates went up 1.5 percent a. What is the market value of the insurance company's loan investment after the changes in interest rates? (Do not round Intermediate calculations. Enter your answer in millions rounded to 3 decimal places. (e.g. 32,161)) b. What is the duration of the loan investment when it was first issued? (Do not round intermediate calculations. Round your answer to 3 decimal places, (e.9., 32.161)) c. Using duration, what is the new expected value of the loan if interest rates are predicted to increase to 11.5 percent from the initial to percent? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. (0.9.32.161)) d. What is the market value of the insurance company's 590 million liability when interest rates rise by 15 percent? (Do not round Intermediate calculations. Enter your answer in millions rounded to 3 decimal places. (0.0, 32,1611) e. What is the duration of the insurance company's liability when it is first issued (Round your answer to the nearest dolor amount) a b C Market value of the loan investment Duration of the loan investment New expected value Market value of the tabt Duration of the ability million years million milion year)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
