Question: Please use the duration formula when solving for this problem. Please solve for the changes in the value of the debt, bonds, and assets. Immunization

Please use the duration formula when solving for this problem. Please solve for the changes in the value of the debt, bonds, and assets.

Please use the duration formula when solving for this problem. Please solve

Immunization Strategies Balance Sheet Liabilities Assets 10,000 Yield = 10% Cost of Capital Debt 5,000 Yield=6%; DB = 5 Equity 5,000 Da = 9 What is the impact on shareholders' equity of the general level of interest rate changes by 1%? =- From the Duration formula: D = - (AV/V)/(Ar/1+r) AV = -DA (Ar/1+r)V

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