A financial institution has the following market value balance sheet structure: Assets Liabilities and Equity Cash $ 1.900 Certificate or deposit $ 10,900 Bond 10,300 Equity 1100 Total suste $ 12,200 Total liabilities and equity $ 12.200 a. The bond has a 10-year maturity, a fixed-rate coupon of 11 percent paid at the end of each year, and a par value of $10,300. The certificate of deposit has a 1-year maturity and a 5 percent fixed rate of interest. The Fl expects no additional asset growth. What will be the net interest income (Nl) at the end of the first year? (Note: Net interest income equals interest income minus interest expense.) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year is the change in Nil caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fr? Assume that all of the Nil in parf (o) is used to cover operating expenses or is distributed as d. Il market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 e. What factor has caused the changes in operating performance and market value for this FI? Complete this question by entering your answers in the tabs below. Required A Required B Required Required Required E If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in NII caused by reinvestment risk or refinancing risk? Netinerest income (NA) is the change in N Gaused by be the net interest income (NIB) at the end of the first year? (Note: Net Interest Income equals interest income minus interest expense.) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in Nll caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fl? Assume that all of the Nil in part (a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year I would the market value of equity be higher or lower than $1,300? e. What factor has caused the changes in operating performance and market value for this Fil? Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the FI? Assume that all of the NII in part (a) is used to cover operating expenses or is distributed as dividends. Market value of the guity for the FL Prev 1 of 5 : Next > . 0 certificate of deposit has a 1-year maturity and a 5 percent fixed rate of interest. The Fl expects no additional asset growth. What will be the net interest income (Nil) at the end of the first year? (Note: Net interest income equals interest income minus interest expense) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in Nil caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fi? Assume that all of the Nil in part(a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year I would the market value of equity be higher or lower than $1,300? e. What factor has caused the changes in operating performance and market value for this Fr 3 onces Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 (Negative amounts should be indicated by a minus sign.) because the value of the bond (assets) would be The market value of the equity would be and the value of the CD would Required C Required E > C TOW Proy 1 of 5 I! Next > Print b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest Income for the second year? Is the change in Nill caused by reinvestment risk or refinancing risk? C. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fi? Assume that all of the Nil in part (a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 e. What factor has caused the changes in operating performance and market value for this Fi? Derences Complete this question by entering your answers in the tabs below. Required A Required B Required Required Required E What factor has caused the changes in operating performance and market value for this Fl? Factor that caused the changes in operating performance and market value for this F12 A financial institution has the following market value balance sheet structure: Assets Liabilities and Equity Cash $ 1.900 Certificate or deposit $ 10,900 Bond 10,300 Equity 1100 Total suste $ 12,200 Total liabilities and equity $ 12.200 a. The bond has a 10-year maturity, a fixed-rate coupon of 11 percent paid at the end of each year, and a par value of $10,300. The certificate of deposit has a 1-year maturity and a 5 percent fixed rate of interest. The Fl expects no additional asset growth. What will be the net interest income (Nl) at the end of the first year? (Note: Net interest income equals interest income minus interest expense.) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year is the change in Nil caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fr? Assume that all of the Nil in parf (o) is used to cover operating expenses or is distributed as d. Il market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 e. What factor has caused the changes in operating performance and market value for this FI? Complete this question by entering your answers in the tabs below. Required A Required B Required Required Required E If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in NII caused by reinvestment risk or refinancing risk? Netinerest income (NA) is the change in N Gaused by be the net interest income (NIB) at the end of the first year? (Note: Net Interest Income equals interest income minus interest expense.) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in Nll caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fl? Assume that all of the Nil in part (a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year I would the market value of equity be higher or lower than $1,300? e. What factor has caused the changes in operating performance and market value for this Fil? Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the FI? Assume that all of the NII in part (a) is used to cover operating expenses or is distributed as dividends. Market value of the guity for the FL Prev 1 of 5 : Next > . 0 certificate of deposit has a 1-year maturity and a 5 percent fixed rate of interest. The Fl expects no additional asset growth. What will be the net interest income (Nil) at the end of the first year? (Note: Net interest income equals interest income minus interest expense) b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest income for the second year? Is the change in Nil caused by reinvestment risk or refinancing risk? c. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fi? Assume that all of the Nil in part(a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year I would the market value of equity be higher or lower than $1,300? e. What factor has caused the changes in operating performance and market value for this Fr 3 onces Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 (Negative amounts should be indicated by a minus sign.) because the value of the bond (assets) would be The market value of the equity would be and the value of the CD would Required C Required E > C TOW Proy 1 of 5 I! Next > Print b. If at the end of year 1 market interest rates have increased 100 basis points (1 percent), what will be the net interest Income for the second year? Is the change in Nill caused by reinvestment risk or refinancing risk? C. Assuming that market interest rates increase 1 percent, the bond will have a value of $9,751 at the end of year 1. What will be the market value of the equity for the Fi? Assume that all of the Nil in part (a) is used to cover operating expenses or is distributed as dividends. d. If market interest rates had decreased 100 basis points by the end of year 1, would the market value of equity be higher or lower than $1,3007 e. What factor has caused the changes in operating performance and market value for this Fi? Derences Complete this question by entering your answers in the tabs below. Required A Required B Required Required Required E What factor has caused the changes in operating performance and market value for this Fl? Factor that caused the changes in operating performance and market value for this F12