What is the impact on economic capital of a 25-basis point decrease in interest rates if...

Transcribed Image Text:

What is the impact on economic capital of a 25-basis point decrease in interest rates if the financial institution is holding a 20-year, fixed-rate, 11% annual coupon bond selling at a par value of $100,000? O An increase of $250 O A decrease of $250 O An increase of $2,024 O A decrease of $1,959 What is the impact on economic capital of a 25-basis point decrease in interest rates if the financial institution is holding a 20-year, fixed-rate, 11% annual coupon bond selling at a par value of $100,000? O An increase of $250 O A decrease of $250 O An increase of $2,024 O A decrease of $1,959

Answer rating: 100% (QA)

Solution Answer is 3rd option An increase of 2024 Working Notes Decrease of 25 basis point decrease ... View the full answer