Assuming that the average duration of First National Bank's $100 million assets is five years, while the average duration of its $80 million liabilities is three years, then a 5 percentage point increase in interest rates will cause the net worth of First National to increase by $              (put a negative sign if it is a decrease) million dollars.

4. Non annual compounding period The number of compounding periods in one year is called compounding frequency. The compounding frequency affects both the present and future values of cash flows. An investor can invest money with a particular bank and earn a stated interest rate of 11.00%; however, interest will be compounded quarterly. Complete the following table by computing the nominal (or stated), periodic, and effective interest rates for this investment opportunity. Interest Rates Nominal rate : Periodic rate Effective annual rate Clancy needs a loan and is speaking to several lending agencies about their interest rates and loan terms. He particularly likes his local bank because he is being offered a nominal rate of 10.00%. However, since the bank is compounding its interest semiannually, the loan will impose an effective interest rate of on his loan. Another bank is also offering favorable terms, so Clancy decides to take a loan of $15,000 from this bank. He signs the loan…

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Suppose the Royal Bank of Pullman has the following​ assets: cash​ = 100​ (with modified duration of​ 0) and a​ 10-year loan worth​ $900 (with modified duration of​ 9). Its liabilities are a CD worth​ $800 (with a modified duration of​ 2). If interest rates rise by​ 1% the​ bank's equity will fall by​ ________ ​ %. A. 9 B. 5.6 C. 2 D. 6.5

You are valuing a bank. The bank currently has assets of $330 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $470. After Year 5, you expect their assets per share to grow at 3.25 percent per year forever. The bank has an ROA of 2.0 percent and an ROE of 13.0 percent. The bank's cost of equity is 11.5 percent. What is the value of the bank's stock? Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent. 69

The size of the national debt concerns many people, but it continues to grow. Let's look at three possible ways to respond. 1. Pay interest only each year with the principal unchanged. 2. Pay neither principal nor interest so the interest compounds annually. (This is basically the situation in many recent years.) 3. Pay off the principal and interest on a regular basis. Assume a debt of $10 billion, an interest rate of 7%, and a 30-year period. Look at the total obligation resulting from each of these three strategies. By total obligation, we mean the amount paid plus the amount owed at the end of 30 years. Which strategy results in the smallest total obligation? O To pay the interest only each year with the principal unchanged. To pay neither the principal nor the interest so the interest compounds annually. To pay off the principal and interest on a regular basis.

) You are asked to estimate the RAROC of a bank's $100 million loan business, 7.5% of which is the economic capital. The average interest rate is 8%. All the loans have the same default probability of 1.5% with a loss given default of 60%. Operating costs are $15 million, and the funding cost of the business is $30 million. The economic capital is invested and earns 6%.

determine the market value of 6 million of long-term debt, the parameters are that for 14 years, payments of 300,000 (5% of 6 million)will be made, concluding with a 15th year of payment of 6,300,000 (interest and principle) and that 12% is representative interest rate. what is the present value of the cash flows?