Question
A bank with a two-year investment horizon issued a one-year CD for $20 million dollars at an interest rate of 1.5%. The bank purchased a
A bank with a two-year investment horizon issued a one-year CD for $20 million dollars at an interest rate of 1.5%. The bank purchased a two-year Treasury with the proceeds that pays 3%. What happens to the profits in the second year if all rates rise by 1%?
The profits rise to $500,000.
The profits drop to $0.
The profits stay the same at $300,000.
The profits decline to $100,000.
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Operations And Supply Chain Management
Authors: F. Robert Jacobs, Richard Chase
14th Edition
287
