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I have the MCQ answer but can you please provide workings / explained answer if possible? Consider an asset with a current market value of
I have the MCQ answer but can you please provide workings / explained answer if possible?
Consider an asset with a current market value of $500,000 and a duration of 7 years. Assume the asset is partially funded through zero-coupon bonds which currently sells for $475,000 and has a maturity of 4 years. The current discount rate is 15% and interest rates are expected to increase by 150 basis points. Which of the following statements is true? a. The current net worth of the position is $25,000 and if interest rates increase the net b. The current net worth of the position cannot be determined, however, if interest rates c. The current net worth of the position is $25,000 and if interest rates decrease the net worth will increase, too. increase the net worth will increase, too. worth will decrease too. increase the net worth will decrease. The current net worth of the position is $25,000 and if interest rates increase the net worth will decrease. e
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