Answered step by step
Verified Expert Solution
Question
1 Approved Answer
4. County Bank has the following market value balance sheet (in millions, all interest at annual rates). Assets Liabilities and Equity Cash $85 Demand deposits
4. County Bank has the following market value balance sheet (in millions, all interest at annual rates). Assets Liabilities and Equity Cash $85 Demand deposits $185 10-year commercial loan at 10% 5-year CDs at 6% interest, interest, balloon payment 175 balloon payment 235 15-year mortgages at 8% interest, 30-year debentures at 7% interest, 110 balloon payment 440 balloon payment Equity 170 Total assets $700 Total liabilities & equity $700 a) What is the maturity gap for County Bank? b) What will be the maturity gap if the interest rates on all assets and liabilities increase by 1%? c) How much will the market value of equity change (in USD)? 4. County Bank has the following market value balance sheet (in millions, all interest at annual rates). Assets Liabilities and Equity Cash $85 Demand deposits $185 10-year commercial loan at 10% 5-year CDs at 6% interest, interest, balloon payment 175 balloon payment 235 15-year mortgages at 8% interest, 30-year debentures at 7% interest, 110 balloon payment 440 balloon payment Equity 170 Total assets $700 Total liabilities & equity $700 a) What is the maturity gap for County Bank? b) What will be the maturity gap if the interest rates on all assets and liabilities increase by 1%? c) How much will the market value of equity change (in USD)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started