PLEASE TELL ME THE ANSWER OF Q9 WITHIN 3 HOURS, THX
In this part. round all answers to FOUR decimal places. 1. What is the price of each of Richmond's corporate bonds? (Calculate the price based on the current yield Box Q $| 5403155 I for the corporate bonds, but as at the date the most recent coupon payment was made prior to today's ' date - the date in Box D in Part 1. For example, if the yield on these bonds is currently 2.556, and the last coupon payment was on 21 March 2016. what would the price have been on 21 March at a yield of 2.5% pa?) 2. What is the duration of Richmond's corporate bonds? Box R 13207 years 3. What is the price of each of Richmond's Treasury bonds? (Assume a face value for each bond of $100. BOX 5 $ 1100049 Calculate the price in the same manner as described above - based on the current yield. but as at the last date a coupon payment was made prior to today's date - the date on Box B in Part 1.) 4. What is the duration of Richmond's Treasury bonds? BOX T 13.8773 years FIN2BFI- BANKING AND FINANCIAL INSTITUTIONS ASSIGNMENT BALANCE SHEET Richmond Banking Corporation Ltd Balance Sheet as at 31/12/18 Be sure to scroll down to see all of the information on this sheet. ASSETS LIABILITIES S Cash and due from other institutions 1,870 Current accounts Trading securities Interest-bearing 7,600 Commercial Paper 1,080 Non-interest bearing 6,980 Bank Bills 3,310 Savings accounts 10,200 Treasury Notes 5,310 Investment savings accounts * * *+ 3,930 9,700 Fixed deposits (long-term) 3,920 Investment securities Certificates of Deposit (long-term) 5,880 Corporate Bonds+ 3,000 Subordinated debt 12,840 Treasury Bonds * * 7,480 Total liabilities 51,350 10,480 Loans Commercial loans * * * 5,390 SHAREHOLDERS' EQUITY Consumer loans * * * 7,210 Ordinary shares 18,800 Mortgage loans * * * 9,390 Preference Shares 5,380 Total loans 21,990 Retained profits 8,740 Exchange Settlement Accounts 2,790 Asset Revaluation Reserve 3,100 Fixed assets & Other assets 40,540 Total shareholders' equity 36,020 Total Assets 87,370 Total liabilities and shareholders' equity 87,370 The corporate bonds pay a semi-annual coupon at the rate of 5.8% p.a. and mature on 21-Nov-2020. They each have a face value of $500. They have all been issued by companies with a credit rating of AAA. * * The Treasury bonds mature on 21-Jun-2035. *#* The mortgage loans have an average term to maturity of 4.6 years and are at variable interest rates. All other loans (assets or liabilities) are at fixed interest rates. * * ** The Investment Savings Accounts are at call. The following table shows the duration of Richmond's assets and liabilities (except that the table does not need to show corporate and Treasury bonds, non-interest rate sensitive assets and assets and liabilities with durations of zero) ASSETS Duration (years) LIABILITIES Duration (years) Commercial Paper 0.40 Fixed deposits (long-term) 4.50 Bank Bills 0.50 Certificates of Deposit 2.30 Treasury Notes 0.40 Subordinated debt 13.30 Commercial loans 3.90 Consumer loans 4.60FIN2BFI - BANKING AND FINANCIAL INSTITUTIONS - ASSIGNMENT PART 3 - INTEREST RATE RISK In this part, round all answers to TWO decimal places. 8. What is the weighted average duration of Richmond's assets (round to 2 decimal places)' Box AG years 9. What is the weighted average duration of Richmond's liabilities (round to 2 decimal pl: Box AH years 10. What is Richmond's duration gap (round to 2 decimal places) ? Box AI years 11. What will be the estimated change in Richmond's equity resulting from a 1 basis point Box AJ ea increase in interest rates? (Use the yield on the bank's Treasury bonds as the starting interest rate in the calculation. Include the correct sign. ) 12. Based on your answer to Question 11, what change in interest rates - an increase or a decrease - is something that Richmond would be disadvantaged by? Explain why. (You will develop risk management strategies in Part 4 based on your answer to this Box AK
