1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Free_Kalibri [48]
3 years ago
13

Village Bank has $310 million worth of assets with a duration of 12 years and liabilities worth $248 million with a duration of

five years. In the interest of hedging interest rate risk, Village Bank is contemplating a macrohedge with interest rate T-bond futures contracts now selling for 104-20 (30nds). The T-bond underlying the futures contract has a duration of eight years. If the spot and futures interest rates move together, how many futures contracts must Village Bank sell to fully hedge the balance sheet? (
Business
1 answer:
vitfil [10]3 years ago
5 0

Answer:

2129  futures contracts to be sold

Explanation:

Asset worth = $310 million

Asset duration = 12 years

liabilities = $248 million

Liabilities duration = 5 years

T-bond futures contracts = 104-20 (30nds)

% of assets = 310 / 248 =

<u>Determine how many futures contracts Village Bank will sell to fully hedge the balance </u>

Number of Contracts = -[Assets * (Asset Duration – (Liabilities Duration * % of Assets) / (Duration * Contract Value)]

 = - [ 310 * ( 12 - ( 5 * (310/248)) / ( 8 * ( 104 + ( 20/30)) ]

= - [ 310 * ( 12 -  6.25 ) / ( 8 * 104.6667 ) ]

= - [ 310 * 5.75 / 837.3336 ]

= - 2.12878 * 1000

= 2128.78 ≈  2129 ( number of futures contracts to be sold )

You might be interested in
Your career should match your __________, your interests, and your abilities.
sveta [45]
Your career should match your hobbies.
3 0
3 years ago
Transportation rates:
nydimaria [60]

Answer:

(B) are established primarily through negotiation.

Explanation:

Transportation rates can be referred to as the cost paid by users for transportation services. They are the negotiated economic cost of moving a traveler or a unit of freight between a specific origin and location. Rates are often visible to the consumers since transport service providers must provide this information to secure transactions.

In transportation, the scale of operations change by:

  1. Adding more vehicles to the fleet
  2. Adding more cars to a train
  3. Increasing the size of vehicles
  4. Operating in a larger network
7 0
3 years ago
Martin wants to provide money in his will for an annual bequest to whichever of his living relatives is oldest. That bequest wil
8090 [49]

Answer:

$16,667

Explanation:

Given that

Cash flows = $1,000

Growth rate = 6%

Interest rate = 12%

So by considering the above information, the amount would be

Amount = Cash flows ÷ (Interest rate - growth rate)

= $1,000 ÷ (12% - 6%)

= $16,667

We simply applied the above formula so that the amount could come by considering the given information

3 0
3 years ago
Kaspar Corporation makes a commercial-grade cooking griddle. The following information is available for Kaspar Corporation's ant
Leto [7]

Answer:

Total cost per unit is $77

Explanation:

Fixed manufacturing overhead per unit = Total fixed manufacturing overhead ÷ Number of units

= $478,800 ÷ 34,200 = $14 per unit

Fixed selling and administrative expenses per unit = Total Fixed selling and administrative expenses ÷ Number of units

= $171,000 ÷ 34,200 = $5 per unit.

Total cost per unit = Direct material + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead + Variable selling expenses + Fixed selling expenses

Total cost per unit = $15 + $5 + $11 + $14 + $5 + $5 = $55 per unit.

Markup = 40% of total cost = $55 × 40% = $22

Therefore, total selling price per unit = Cost per unit + Markup

= $55 + $22 = $77 per unit.

7 0
3 years ago
How does immigration not lead to poverty?
Ira Lisetskai [31]

Answer:

Poverty rates and median family income

Indeed, the poverty rate of recent immigrants is more than twice that of U.S. natives. Because of this, at any point in time, the poverty rate would most certainly be lower in the absence of immigration. Also, increasing the immigrant share will raise the poverty rate.

Explanation:

have a great day

7 0
2 years ago
Other questions:
  • Mary's Cookies submitted an ad to the local newspaper with a coupon stating that a dozen cookies cost $2.99. The newspaper inste
    15·1 answer
  • Natasha’s persuasive speech contained the following statement: When schools switch to a year-round schedule, students won’t have
    15·1 answer
  • Mark and Barry own the Warehouse Liquor Store in town. They are careful to pay all of their taxes in full and on time. Recently
    10·1 answer
  • On April 1, 2013, Four Seasons Landscaping, LLC purchased new lawn mowers for $70,000 in cash (total cost). They have a useful l
    5·1 answer
  • The proper discount rate when using the dividend discount valuation model is the:
    14·1 answer
  • The Babylonians in sumer used what as a monetary commodity ?
    7·1 answer
  • Donald Transport assembles prestige manufactured homes. Its job-costing system has two direct-cost categories (direct materials
    14·1 answer
  • Detailing's cost formula for its materials and supplies is $2,060 per month plus $12 per vehicle. For the month of August, the c
    10·2 answers
  • Steve Smith will receive $82,870 on 5 years from now, from a trust fund established by his father. Assuming the appropriate inte
    14·1 answer
  • The sum of all five terms of an arithmetic sequence is $55$. Find the sum of the first three terms of the sequence if the sum of
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!