The duration gap is calculated by subtracting the duration of the liabilities from the duration of the activity of the financial entities. Thus, in this case, the net worth of 1.8 percent of its assets.
<h3>What do you mean by Duration Gap?</h3>
Duration Gap refers to the term used by funds, banks, pensions, or many financial institutions to estimate the risk because of changed interest rates.
Also, if we have a negative duration gap means that the market value of equity will increase when interest rates rise.
Thus, in this case, If interest rates increase from 9 percent to 10 percent, a bank with a duration gap of 2 years would experience a decrease in its net worth of 1.8 percent of its assets.
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A firm expects to sell 25,500 units of its product at $11. 50 per unit and to incur variable costs per unit of $6. 50. total fixed costs are $75,000. the total contribution margin is $127500.
The contribution margin is computed as the promoting rate per unit, minus the variable fee in keeping with the unit. additionally referred to as greenback contribution in keeping with the unit, the measure shows how a specific product contributes to the general profit of the organization.
The closer a contribution margin percentage, or ratio, is to 100%, the better. The better the ratio, the more money is available to cowl the commercial enterprise's overhead expenses or fixed prices. However, it is more likely that the contribution margin ratio is well below one hundred%, and possibly beneath 50%.
Contribution margin, or greenback contribution per unit, is the selling rate per unit minus the variable price in step with the unit. "Contribution" represents the part of sales revenue that is not consumed through variable expenses and so contributes to the coverage of constant fees.
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Answer:
The correct answer is letter "D": The disclosure rule.
Explanation:
In management, the disclosure rule implies releasing relevant information of the company to the masses. Executives face an ethical dilemma when the information could harm the firm's public image or when the information is manipulated so the information that could compromise the organization is not provided to the audience.
Answer:
$15,000 cash inflow from financing activities
Explanation:
Financing operations: it records operations concerning long-term debt and equity balance of shareholders. The issuance of the shares is an inflow of cash while other redemption and dividend are an outflow of cash
Since 1,000 shares are issued at $10 par value for $15 per cash
Here we record the $15,000 as cash inflows as this represents that the capital introduced in the business and the same is to be considered
Answer:
the 5 year A-rated corporate bond yields 0.3% more than the 10-year Treasury bond
Explanation:
the yield of a 10 year treasury bond = real risk free rate + average future inflation rate + (maturity premium x number of years) = 3.5% + 2.5% + (20% x 10 years) = 8%
the yield of a 5 year A-rated corporate bond = real risk free rate + average future inflation rate + liquidity premium + default risk premium + (maturity premium x number of years) = 3.5% + 2.5% + 0.5% + 0.8% + (20% x 5 years) = 8.3%
difference in yields = 8.3% - 8% = 0.3%
