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o 0 Please use this information for the first 3 problems. A financial institution has the following balance sheet structure: Assets: . Cash. $1,000 Bond.
o 0 Please use this information for the first 3 problems. A financial institution has the following balance sheet structure: Assets: . Cash. $1,000 Bond. $10,000 Liabs + Equity . Certificate of deposit $10,000 Equity $1,000 The bond has a 10 year maturity, a fixed coupon of 10% paid at the end of each year and par value of $10,000. The CD has a one-year maturity, and a 6% fixed rate of interest. What will be the net interest income in dollars at the end of the first year? Using the same information from the prior question: At the end of year 1, market interest rates have increased 100 basis points. What will be the net interest income for year 2? Is this an example of refinancing or reinvestment risk? refinancing risk O reinvestment risk
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