Assume that securitization combined with borrowing and irrational exuberance in Hyperville have driven up the value of asset-backed financial securities at a geometric rate, specifically from $4 to $8 to $16 to $32 to $64 to $128 over a six-year time period

Suppose X Corp. issued one-year discount bonds with a face value of $5,000 and the bonds were sold for $4,800. In this case, X Corp. saved $5,000 borrowed $5,000 saved $4,800 borrowed $4,800

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d)Assume that all the information given previously is the same and the defaultrisk premium for corporate bonds rated AAA is 1.5 percent, whereas it is4 percent for corporate bonds rated B. Compute the interest rates onAAA- and B-rated corporate bonds with maturities equal to one year, twoyears, three years, four years, five years, 10 years, 20 years, and 30 years.

The following financial statement is for the current year. From the past, you know that 10% of fixed-rate mortgages prepay each year. You also estimate that 10% of checkable deposits and 20% of savings accounts are rate sensitive. Second National Bank Assets Liabilities Reserves $ 1,500,000 Checkable Deposits $ 15,000,000 Securities Money Market Deposits $ 5,500,000  1 Year $ 6,000,000 Savings Accounts $ 8,000,000 1 to 2 Years $ 8,000,000 CDs  2 years $ 12,000,000 Variables-rate $ 15,000,000 Residential Mortgages  1 Year $ 22,000,000 Variables-rate $ 7,000,000 1 to 2 Years $ 5,000,000 Fixed-rate $ 13,000,000  2 years $ 2,500,000 Commercial Loans Fed Funds $ 5,000,000  1 Year $ 1,500,000 Borrowings 1 to 2 Years $ 18,500,000  1 Year $ 12,000,000  2 years $ 30,000,000 1 to 2 Years $ 3,000,000 Buildings, etc. $ 2,500,000  2 years $ 2,000,000 Bank Capital $ 5,000,000 Total $100,000,000 Total $100,000,000 (a) What is the current Income GAP for Second National Bank?  (b) What will…

Let us assume that you have been asked to calculate risk-based capital ratios for Marissa Bills (MB) Bank, a regional commercial bank, with the following accounts: Cash $10 million Government securities 58 million Mortgage loans $33 million Other loans $55 million Fixed assets $ 15 million Intangible assets $2 million Loan-loss reserves 56 million Common equity $8 million Trust-preferred securities $4 million Cash assets and government securities are not considered risky. Loans secured by real estate have a 50% weighting factor. All other loans have a 100% weighting factor in terms of riskiness. a. Calculate the common equity capital ratio of MB Bank. At the year-end, if the MB Bank has $2 million in bad mortgage loans, how the common equity capital ratio would change? b Calculate the Tier 1 capital ratio of MB Bank using risk-adjusted assets. c. Calculate the total capital (Tier 1 plus Tier 2) capital ratio of MB Bank using risk-adjusted assets. d. As a manager of MB Bank, what…

Suppose Ford Motor Company issues bonds with a face value of $500 and an annual coupon payment of $20 What is the interest rate Ford is paying on the borrowed funds? The interest rate is percent

Question 2 of 10. Paul owns 100 shares of stock in an S corporation which he purchased for $57 per share. He gave 10 shares to his daughter, Julie. He also sold 10 shares to his friend, Bill, for $65 a share. What are Paul, Julie, and Bill's respective bases after those transactions? Paul: $4,560Julie: $570Bill: $570 Paul: $4,560Julie: $570Bill: $650 Paul: $5,700Julie: $570Bill: $570 Paul: $5,700Julie: $570Bill: $650

Caspian Bank has negotiated a plain vanilla swap in which it will exchange fixed payments of 8% for floating payments equal to LIBOR plus 0.5% at the end of each of the next three years. In the first year, LIBOR is 8%; in the second year, 9%; in the third year, 7%. What is the total net payment Caspian Bank receives, over the three-year period, if the notional principal is $10 million?   (Please explain work)

The remarkable thing about the events described in the article is that the yield on the 3-month T-bill was briefly negative. To see how this could happen, consider the relationship between bond prices and bond yields. A 3-month T-bill with a maturity value of $1,000 is just a piece of paper that entitles the holder to $1,000 in three months. For example, if you were to buy a 3-month T-bill on September 24, 2008, with a maturity value of $1,000 and 90 days left to maturity, the U.S. government would pay you $1,000 on December 23, 2008. In general, the price of a bond is less than its maturity value. That is, if you are going to give up a certain amount of money for the duration of the bond, you expect to be paid for this loss of liquidity and compensated for inflation that could reduce the value of the repayment at the end of the period. Therefore, a piece of paper entitling you to $1,000 on December 23 would usually be worth less than $1,000 on September 24. The yield on a bond is a…