Refer again to the financial institution in problem 26.

a. What is the change in the value of the firm’s assets for relative upward shift in the entire yield curve of 0.5 percent?

b. What is the change in the value of the firm’s liabilities for relative upward shift in the entire yield curve of 0.4 percent? 

c. What is the resulting change in the value of equity for the firm?

Data from Problem 26:

The following balance sheet information is available (amounts in thousands of dollars and duration in years) for a financial institution:

Treasury bonds are five-year maturities paying 6 percent semiannually and selling at par.

Transcribed Image Text:

Amount $90 Duration T-bills 0.50 T-notes T-bonds 55 0.90 176 х Loans 2,724 2,092 238 7.00 Deposits Federal funds 1.00 0.01 Equity 715