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What is the maturity gap for Nearby Bank? Is Nearby Bank more exposed to an increase or a decrease in interest rates? Explain why?
What is the critical requirement that allows maturity matching? to have some success in immunizing the balance sheet of an FI?
What is the gap ratio? What is the value of this ratio to interest rate risk managers and regulators?
Calculate the repricing gap and the impact on net interest income of a 1percent increase in interest rates for each position.
What are the reasons for not including demand deposits as rate-sensitive liabilities in the repricing analysis for a commercial bank?
How should the bank manager adjust the bank"s six-month repricing gap to take advantage of this anticipated rise?
What is the CGAP effect? According to the CGAP effect, what is relation between change in interest rate and change in net interest income when CGAP is positive?
What is a maturity bucket in the repricing model? Why is the length of time selected for repricing assets and liabilities important in using repricing model?
In using this model to evaluate interest rate risk, what is meant by rate sensitivity? On what financial performance variable does the repricing model focus?
Given this information, what is the approximate real rate of interest on short-term Treasury bills?
Which one has the largest yield change? What do your answers tell you about the relationship between prices, yields, and maturity for discount bonds?
How much do you expect to pay for a 5-year STRIPS on February 15, 2001? How much do you expect to pay for a 2-year STRIPS on February 15, 2003?
What is the corresponding implied forward rate? How does your answer compare to the current yield on a 1-year STRIPS?
If the term of the instrument is 120 days, what are the bond-equivalent and discount yields on this investment?
Suppose John has a utility function U(y)= y 0.5where y is wealth. If John maximises expected utility, what value of a will John choose?
The added cost of therapy is $14,000. What is the cost per life year? Should you choose tPlex or Isother?
Of the 300 dairy farms, 298 have a cost structure that generates profits of $36.00 for every $600.00 invested. What is the rate of return?
The function of price mechanism is to satisfy human wants. In what way will the price mechanism fail to carry out this function efficiently?
If the fixed costs increase by $100,000 each year, what is the EUAC for a 10 year perios? Assume the interest rate is 12 percent.
How might prohibitions on advertising affect the cigarette industry in the short run, and in the long run using a Prisoner's Dilemma sort of argument.
If the multinational meets these targets what is likely to have happened to its total costs, total revenue, average costs and average revenue?
Objectives: What are the corporate, business, and functional objectives? Are they consistent with each other and with the mission?
What is the direction of the substitution effect (that is, what happens to leisure/work)? Assuming leisure if a normal good, what is the direction of the inco
How similar products are advertised on television or in newspaper advertisements. How does each try to create a demand for its product? Is price mentioned?
When determining how a policy will change social welfare, changes in individual utility for high-income individuals are weighted more heavily.