SusuBirirbi Credit, Ltd has GH¢35.0 million in consumer loans with an average interest rate of 12.0%. The bank also has GH¢30.0 million in home equity loans with an average interest rate of 8.0%. Finally, the bank owns GH¢5.0 million in corporate securities with an average interest rate of 6%. Next year, consumer loans will increase to GH¢40.0 million because of a rate decrease to 10.0%, while home equity loans will increase to GH¢32.0 million at an average interest rate of 6.5%. Unfortunately, the investment in corporate securities will decrease by 20%, and the average interest rate will be only 9.0%. What is SusuBirirbi's estimated change in revenues next year?
Macrohedging
Hedging or hedge accounting is a risk-mitigation technique used to protect the current financial position from potential losses. Hedging is often confused with speculating. The major difference between the two is that hedging does not involve guessing, whereas speculation is based on guessing the direction of movement of the underlying asset to book profits.
Finance Mathematics
The area of applied mathematics known as mathematical finance, also known as quantitative finance or financial mathematics is concerned with the mathematical modeling of financial markets. The application of mathematical methods to financial problems is known as financial mathematics. A financial market is a place where people can exchange low-cost financial securities and derivatives. Stocks and bonds, raw materials, and precious metals, both of which are regarded as commodities in the stock markets, are examples of securities. It uses probability, statistics, stochastic processes, and economic theory as methods.
SusuBirirbi Credit, Ltd has GH¢35.0 million in consumer loans with an average interest rate of 12.0%. The bank also has GH¢30.0 million in home equity loans with an average interest rate of 8.0%. Finally, the bank owns GH¢5.0 million in corporate securities with an average interest rate of 6%. Next year, consumer loans will increase to GH¢40.0 million because of a rate decrease to 10.0%, while home equity loans will increase to GH¢32.0 million at an average interest rate of 6.5%. Unfortunately, the investment in corporate securities will decrease by 20%, and the average interest rate will be only 9.0%. What is SusuBirirbi's estimated change in revenues next year?
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