Suppose that the term structure is at r0 = 4% APR, compounded
Question: Suppose that the term structure is at r0 = 4% APR, compounded
Excel Problem. Suppose that the term structure is at r0 = 4% APR, compounded monthly. Consider the balance sheet of a credit union. The credit union has $100M in demand deposit and the bank lends out all of the deposit as car loans. The car loans are all issued at the same time and have a maturity of 5 years with monthly payments. Suppose that the car loans are e ectively risk less and have an interest rate of 4% APR compounded monthly.
(a) Find the required (total) monthly payments and duration of the car loans. Hint: you can either
use the annuity formula or you can use solver in excel.
(b) If interest rates rise to 4.1%, what is the new value of the car loans? Note: if rates rise, the
value of the demand deposits do not change, though the credit union will have to pay higher
interest payments to depositors in the future.
(c) Is it good news or bad news for the credit union if rates go up?
Trackbacks and pingbacks

fb login _
... [Trackback] [...] Info on that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
read the article
... [Trackback] [...] Find More Info here to that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
card dumps
... [Trackback] [...] Here you can find 4310 more Information on that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
faux Link Calibre S
... [Trackback] [...] Find More Info here to that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
moonrocks
... [Trackback] [...] Info on that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
Digital Transformation
... [Trackback] [...] Find More here to that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
sexyback clean
... [Trackback] [...] Info on that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
카지노사이트
... [Trackback] [...] Info to that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
plumbing company Boardman
... [Trackback] [...] Read More Information here to that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...] 
https://boccadentalspa.com
... [Trackback] [...] There you will find 29298 additional Information on that Topic: wiseamerican.us/supposetermstructurer04aprcompounded/ [...]