Answered: Month RSA (RM million) RSL (RM million)…

Month RSA (RM million) RSL (RM million) GAP (RM million) 1 44 52 -8 2 168 160 +8 3 4 160 120 220 120 -60 0 5 144 128 +16 6 240 170 +70 Total 876 850 +26

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Mr. Aiman, Treasurer of AJ Finance Berhad, has just completed a Maturity Bucket Analysis based on the a 6-month horizon.

a) If the market expectation is increase in interest rates, find the maturity bucket should Mr. Aiman, worries most about. Explain why the particular bucket matters.

b) Outline an appropriate hedge strategy for Mr. Aiman,.

Month
1
2
3 4 5
6
Total
RSA (RM million)
RSL (RM million)
GAP (RM million)
44
168
160
120
144
240
876
52
160
220
120
128
170
850
-8
+8
-60
+16
+70
+26

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