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In lectures, we derived the following equation: AR AE = D.-D,k)x AX (1+R) This equation assumes that interest rates are the same for assets and
In lectures, we derived the following equation: AR AE = D.-D,k)x AX (1+R) This equation assumes that interest rates are the same for assets and liabilities and that the change in interest rates is the same for assets and liabilities. 5 LAST UPDATED ON 13TH MAY 2020 (i) What would be the formula for the change in the market value of equity if we assume that interest rates are different for assets and liabilities and that the change in the level of interest rates is different for assets and liabilities? (Hint: You may need to introduce new notation for the: interest rate on assets, the interest rate on liabilities, the change in interest rates for assets; the change in interest rates for liabilities) (ii) Using this formula, adjust the spreadsheet model on myuni (Go to "Modules'> Cavaadcheets Used in Lectures'>'Lecture4Examples.xlsx'> 'Slide 107') and use this adjusted CRA as a result of a possible interest In lectures, we derived the following equation: AR AE = D.-D,k)x AX (1+R) This equation assumes that interest rates are the same for assets and liabilities and that the change in interest rates is the same for assets and liabilities. 5 LAST UPDATED ON 13TH MAY 2020 (i) What would be the formula for the change in the market value of equity if we assume that interest rates are different for assets and liabilities and that the change in the level of interest rates is different for assets and liabilities? (Hint: You may need to introduce new notation for the: interest rate on assets, the interest rate on liabilities, the change in interest rates for assets; the change in interest rates for liabilities) (ii) Using this formula, adjust the spreadsheet model on myuni (Go to "Modules'> Cavaadcheets Used in Lectures'>'Lecture4Examples.xlsx'> 'Slide 107') and use this adjusted CRA as a result of a possible interest
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