Question 23The price of a bond declined from $925 to $900 when the yield to maturity rose from 2.25% to4.25%. What is the modified duration?O 2.00O 1.54O 1.35O 1.20O 1.00 DoQuestion 22Rank XYZ ha the illwg kvie hlance sheet tenpeeds of dollAssetsLiabilities5-yearShort-term Loans750950CDsNetLong-term Loans25050WorthThe short-tems loans are zero coupon and repaid at the end of 1 year. The Long-term loans are zero coupon loansthat mature in 5 years. On the liability side, the 5-year CDs are also zero coupon. Assume that the yield curve is flatand interest rates are 10% today. Suppose you want to duration hedge the bank's equity by buying a 6-yearTreasury STRIP financed with overnight borrowing in the interbank market. How would you hedge against a 1%increase in interest rates using STRIPS?O Short 458 millionO Long 458 millionO Long 500 millionO Short 500 millionO Long 550 million

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Answered: The price of a bond declined from $925…

The price of a bond declined from $925 to $900 when the yield to maturity rose from 2.25% to 4.25%. What is the modified duration? 2.00 O 1.54 1.35 O 1.20 O 1.00

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

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Chapter7: Using Consumer Loans

Section: Chapter Questions

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