eg 3216 to Swiss investor b What is the loss or gain to a US investor who holds

# Eg 3216 to swiss investor b what is the loss or gain

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places. (e.g., 32.16)) to Swiss investor % b. What is the loss or gain to a U.S. investor who holds this bond for a year? (Input the amount as a positive value. Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) to U.S. investor 1) Loss or gain to a Swiss investor who holds this bond for a year Yeild of bond at year end = 9% i.e., 2300*9% = 207 SF At year begining SF1= US \$ 0.66667 at year end SF1= US \$0.74074 gain for Swiss investor = SF 2300+207 *(0.74074-0.66667) = SF 185.69 Loss for US investor = year begining US\$ 1= SF1/0.66667 i.e, US \$1= SF 1.49 Year end US \$1=SF 1/0.74074 i.e, US\$ 1 =SF 1.35 loss to US investor = SF 2300+207 *(1.49-1.35) = SF 350.98 Countrybank offers one-year loans with a stated rate of 13 percent but requires a compensating balance of 7 percent. What is the true cost of this loan to the borrower? (Round your answer to 2 decimal places. (e.g., 32.16)) Explanation The true cost will be 0.13/(1 0.07) = 0.1398 = 13.98% Metrobank offers one-year loans with a 11 percent stated rate, charges a 1/4 percent loan origination fee, imposes a 9 percent compensating balance requirement, and must pay a 6 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans? (Do not round Explanation Some values below may show as rounded for display purposes, though unrounded numbers should be used for the actual calculations. 1 + k = 1 + (0.0025 + 0.11)/(1 (0.09)(0.94)) = 1 + 0.1125/0.915 = 1.123, k = 0.123 = 12.3% HW 13 Consider the following balance sheet for Watchover Savings Inc. (in millions): Assets Liabilities and Equity Floating-rate mortgages (currently 13% p.a.) \$ 66 Now deposits (currently 9% p 30-year fixed-rate loans (currently 10% p.a.) 93 5-year time deposits (current p.a.) Equity Total \$159 Total a. What is Watchover’s expected net interest income at year-end? (E b. What will be the net interest income at year-end if interest rates rise by 2 percent? ( c. Using the one-year cumulative repricing gap model, what is the change in the expected net interest income for a 2 percent increase in interest rates? (Negative amount should be indicated by a minus sign. Enter your answer in millions rounded to 2 decimal Explanation a. Expected interest income: (\$66 million × 0.13) + (\$93 million × 0.1) = \$17.88 million Expected interest expense: (108 million × 0.09) + (\$18 million × 0.09) = \$11.34 million Expected net interest income: \$17.88 million \$11.34 million = \$6.54 million b. After the 200 basis point interest rate increase, net interest income declines to 66 million (0.15) + 93 million (0.1) (108 million (0.11) + 18 million (0.09)) = \$19.2 million \$13.5 million = \$5.70 million, a decline of \$.8 million. c. Watchover Saving’s repricing, or funding, gap is \$66 million \$108 million = −\$42.0 million. The change in net interest income is (−\$42 million)(0.02) = −\$0.84 million. 