Use the following balance sheet information to answer questions 30-34. All assets and liabilities are currently priced at par and pay interest annually.

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Assets ($ millions) Liabilities ($ millions)

1-year 7% coupon bonds $45 1-year 5% IR CD $75

10-year 12% loan $55 2-year 6% IR CD $20

Equity 5

$100 $100

What is the weighted average maturity of assets?

a. 5.5 years

b. 5.95 years

c. 1.5 years

d. 1.21 years

e. 10 years

What is the weighted average maturity of liabilities?

a. 5.50 years

b. 5.95 years

c. 1.50 years

d. 1.21 years

e. 2.00 years

What will be the market value of the one-year bond if all market IRs increase by 2 % ?

a. $45.000 million

b. $44.174 million

c. $47.706 million

d. $42.237 million

e. $100.00 million

If all market IRs decrease by 2 %, the market value of the one year bond:

a. will rise

b. will be approximately $45.857

c. will rise more (in absolute value) than it would decline if IRs rose by 2%

d. will rise less than the market value of the 10-year loan would

e. all of the above are true

What is market value of the one-year CD if all market IRs increase by 2 %?

a. $75.000 million

b. $76.456 million

c. $73.598 million

d. $74.766 million

e. $100.00 million

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