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Category > Business & Finance Posted 28 May 2017 My Price 7.00

Use duration gap analysis to determine if there is interest rate risk in the following transaction

 

Is there interest rate risk? Use duration gap analysis to determine if there is interest rate risk in the following transaction: A bank obtains $25,000 in funds from a customer who makes a deposit with a 5-year maturity that pays 5% annual interest compounded daily. All interest and principal are paid at the end of 5 years. Simultaneously, the bank makes a $25,000 loan to an individual to buy a car. The loan is at a fixed rate of 12% annual interest but is fully amortized with 60 monthly payments, such that the borrower pays the same dollar amount (principal plus interest) each month.
 
 

Answers

Alpha Geek
(8)
Status NEW Posted 28 May 2017 10:05 AM My Price 7.00

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file 1495967815-Answer.docx preview (200 words )
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