Mutual Assurance Insurance Company has $782 million in total assets with an average duration of 5.47 years. It has total liabi (excluding common equity) of $696 million with an average duration of 8.13 years. If market interest rates are currently at 8%, would happen to the company if market interest rates changed to 10%? O The value of the company's equity would increase by just over $25 million. O The income of the company's assets would decrease by just over $2.556 million. O The value of the company's net worth would decrease by just over $25 million. O The income of the company would increase by just over $2.556 million. O The income of the company would increase by $25.2 million.
Mutual Assurance Insurance Company has $782 million in total assets with an average duration of 5.47 years. It has total liabi (excluding common equity) of $696 million with an average duration of 8.13 years. If market interest rates are currently at 8%, would happen to the company if market interest rates changed to 10%? O The value of the company's equity would increase by just over $25 million. O The income of the company's assets would decrease by just over $2.556 million. O The value of the company's net worth would decrease by just over $25 million. O The income of the company would increase by just over $2.556 million. O The income of the company would increase by $25.2 million.
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
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Transcribed Image Text:Mutual Assurance Insurance Company has $782 million in total assets with an average duration of 5.47 years. It has total liabilities
(excluding common equity) of $696 million with an average duration of 8.13 years. If market interest rates are currently at 8%, what
would happen to the company if market interest rates changed to 10%?
O The value of the company's equity would increase by just over $25 million.
O The income of the company's assets would decrease by just over $2.556 million.
O The value of the company's net worth would decrease by just over $25 million.
The income of the company would increase by just over $2.556 million.
O The income of the company would increase by $25.2 million.
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