(Answered) A bank issues a 100000 variable-rate 30-year mortgage with

Finance

A bank issues a $100,000 variable-rate 30-year mortgage with a nominal annual rate of 4.5%. If the required rate drops to 4.0% after the first six months, what is the impact on the interest income for the first 12 months? Assume the bank hedged this risk with a short position in a 181-day T-bill future. The original price was 97 26/32, and the final price was 98 1/32 on a $100,000 face value contract. Did this work?

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91885899
Price:- $10

Verified Expert

Priced at $20 Now at $10, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Your company has an opportunity to invest in a project that

Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $16,000 the first year, $18,000 the second year, $21,000 the third year, $24,000 the fourth year, $28,000 the f ...

Jose purchased 635 shares of common stock in tworoger

Jose purchased 635 shares of common stock in Tworoger Technologies, Inc. six years ago for$23.40 per share, or $14,859. His financial advisor thinks the stock has peaked and has advised him to sell his shares. The curren ...

Would you pay 23 for a share of common stock that just paid

Would you pay $23 for a share of common stock that just paid a $1.65 dividend, its expected growth rate is 4% and your required return is 11%?

If the interest rate is 7 percent what is the value of the

If the interest rate is 7 percent, what is the value of the following three investments? An investment which offers you $100 a year in perpetuity with the payment at the end of each year, A similar investment with the pa ...

Pk software has 76 percent coupon bonds on the market with

PK Software has 7.6 percent coupon bonds on the market with 23 years to maturity. The bonds make semiannual payments and currently sell for 108.25 percent of par. What is the current yield on PK's bonds? (Do not round i ...

What are the possible downsides of momentum investing is it

What are the possible downsides of momentum investing? Is it worth it do utilise this approach?

A project costs 67600 and is expected to generate 16000 per

A project costs $67,600 and is expected to generate $16,000 per year for 6 years. The firm's required rate of return is 8%. What is the traditional payback period and discounted payback period?

If you deposit 446900 at 789 annual interest compounded

If you deposit $4,469.00 at 7.89% annual interest compounded quarterly, how much money will be in the account after 20.0 years? If you deposit $125.00 into an account paying 12.39% annual interest compounded monthly, how ...

Question - assume that your father is now 40 years old that

Question - Assume that your father is now 40 years old, that he plans to retire in 20 years, and that he expects to live for 25 years after he retires, that is until he is 85. He wants a fixed retirement income that has ...

What do you think is the most important factor in

What do you think is the most important factor in developing a successful agile transformation? Why? What do you think are three most critical factors in a change management initiative? Why?

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert