Question
The bond has a 15-year maturity and fixed-coupon rate of 5 percent. The certificate of deposit has a one-year maturity and a 3 percent fixed
- The bond has a 15-year maturity and fixed-coupon rate of 5 percent. The certificate of deposit has a one-year maturity and a 3 percent fixed rate of interest. SBSC bank expects no additional asset growth.
a) Calculate the market value of equity at the end of year one assuming that market interest rates decreased by 50 basis points.
Assets
Cash - $2,000
Bond - $20,000
Liabilities and Equity
Certificate of Deposit - $20,000
Equity $2,000
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Personal Finance An Integrated Planning Approach
Authors: Ralph R Frasca
8th edition
136063039, 978-0136063032
