Refer to the following table: \[\begin{array}{l} \text { First Nationwide Bank }\\ \begin{array} { | l | l | l | } \hline & { \text { Assets } } & { \text { Liabilities } } \\ \hline \text { Interest-sensitive } & \$ 90 \text { million } & \$ 80 \text { million } \\ \hline \text { Fixed-rate } & \$ 60 \text { million } & \$ 40 \text { million } \\ \hline \end{array} \end{array}\] If interest rates rise by 500 basis points,bank profits (measured using repricing gap analysis)will:

A) fall by $0.5 million. B) fall by $1.5 million. C) increase by $0.5 million. D) increase by $1.5 million. A) fall by $0.5 million. B) fall by $1.5 million. C) increase by $0.5 million. D) increase by $1.5 million.

Exam 14: Interest Rate Risk

The duration of a 10-year,10% per annum coupon bond,when the interest rate is 10%,is 6.76 years.What happens to the price of the bond if interest rates fall to 8% per annum? The price:

(Multiple Choice)

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Question 41

Calculate the duration of a five-year bond with face value $1000,fixed coupon of 8% per annum,with current market yields of 9%.

(Multiple Choice)

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Question 42

Refer to the following table: First Nationwide Bank Assets Liabilities Interest-sensitive \ 90 million \ 80 million Fixed-rate \ 60 million \ 40 million If interest rates rise by 500 basis points,bank profits (measured using repricing gap analysis)will:

(Multiple Choice)

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Question 43

If an organisation has a repricing gap equal to a negative $30 million,a 500 basis point increase in interest rates will cause profits to:

(Multiple Choice)

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Question 44

If a financial organisation has a repricing gap equal to a negative $30 million,a 500 basis point drop in interest rates will cause profits to:

(Multiple Choice)

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Question 45

The interest rate risk of a bond is the:

(Multiple Choice)

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Question 46

In order to compare the risk properties of two bonds with different coupons and maturities a bond fund manager may use:

(Multiple Choice)

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Question 47

Which of the following is NOT an internal method of interest rate risk management?

(Multiple Choice)

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Question 48

Within the context of financial risk management,discuss internal and external methods for interest rate risk.

(Essay)

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Question 49

The procedure of creating marketable debt instruments that are backed by otherwise illiquid assets is known as:

(Multiple Choice)

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Question 50

If an organisation has a repricing gap equal to a positive $20 million,a 500 basis point drop in interest rates will cause profits to:

(Multiple Choice)

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Question 51

Which of the following is a technique that an institution with rate-sensitive liabilities could perform in order to reduce interest rate risk?

(Multiple Choice)

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Question 52

Which of the following statements about duration is incorrect?

(Multiple Choice)

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Question 53

When a firm decides to lower its debt-to-equity ratio and implement a strategy to sell excess assets and buy back some outstanding debt issues,it is:

(Multiple Choice)

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Question 54

A three-year bond with a current yield of 10% per annum and a duration of 2.76 years,when compared with a four-year bond with a current yield of 12% per annum and duration of 3.43 years,will _______ when interest rates rise.

(Multiple Choice)

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Question 55

When the duration of a portfolio's assets matches the duration of its liabilities,adjusted for leverage,it is:

(Multiple Choice)

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Question 56

Because of convexity of the price/yield curve of fixed-interest securities,when interest rates _,duration will _ the change in price.

(Multiple Choice)

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Question 57

When a change in interest rate influences the future actions of market participants,this is called _____ interest rate risk.

(Multiple Choice)

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Question 58

The duration of a bond is related to:

(Multiple Choice)

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Question 59

Large fluctuations in interest rates:

(Multiple Choice)

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Question 60

Showing 41 - 60 of 95

Exam 14: Interest Rate Risk

The duration of a 10-year,10% per annum coupon bond,when the interest rate is 10%,is 6.76 years.What happens to the price of the bond if interest rates fall to 8% per annum? The price:

Calculate the duration of a five-year bond with face value $1000,fixed coupon of 8% per annum,with current market yields of 9%.

Refer to the following table: First Nationwide Bank Assets Liabilities Interest-sensitive \ 90 million \ 80 million Fixed-rate \ 60 million \ 40 million If interest rates rise by 500 basis points,bank profits (measured using repricing gap analysis)will:

If an organisation has a repricing gap equal to a negative $30 million,a 500 basis point increase in interest rates will cause profits to:

If a financial organisation has a repricing gap equal to a negative $30 million,a 500 basis point drop in interest rates will cause profits to:

The interest rate risk of a bond is the:

In order to compare the risk properties of two bonds with different coupons and maturities a bond fund manager may use:

Which of the following is NOT an internal method of interest rate risk management?

Within the context of financial risk management,discuss internal and external methods for interest rate risk.

The procedure of creating marketable debt instruments that are backed by otherwise illiquid assets is known as:

If an organisation has a repricing gap equal to a positive $20 million,a 500 basis point drop in interest rates will cause profits to:

Which of the following is a technique that an institution with rate-sensitive liabilities could perform in order to reduce interest rate risk?

Which of the following statements about duration is incorrect?

When a firm decides to lower its debt-to-equity ratio and implement a strategy to sell excess assets and buy back some outstanding debt issues,it is:

A three-year bond with a current yield of 10% per annum and a duration of 2.76 years,when compared with a four-year bond with a current yield of 12% per annum and duration of 3.43 years,will _______ when interest rates rise.

When the duration of a portfolio's assets matches the duration of its liabilities,adjusted for leverage,it is:

Because of convexity of the price/yield curve of fixed-interest securities,when interest rates _______,duration will _______ the change in price.

When a change in interest rate influences the future actions of market participants,this is called _____ interest rate risk.

The duration of a bond is related to:

Large fluctuations in interest rates:

A Modern Financial System: An Overview

Commercial Banks

Non-Bank Financial Institutions

The Share Market and the Corporation

Corporations Issuing Equity in the Share Market

Investors in the Share Market

Forecasting Share Price Movements

Mathematics of Finance: An Introduction to Basic Concepts and Calculations

Short-Term Debt

Medium-To-Long-Term Debt

International Debt Markets

Government Debt, monetary Policy and the Payments System

An Introduction to Interest Rate Determination and Forecasting

Foreign Exchange: The Structure and Operation of the Fx Market

Foreign Exchange: Factors That Influence the Exchange Rate

Foreign Exchange: Risk Identification and Management

An Introduction to Risk Management and Derivatives

Future Contracts and Forward Rate Agreements

Options

Interest Rate Swaps, Cross-Currency Swaps and Credit Default

Filters

Because of convexity of the price/yield curve of fixed-interest securities,when interest rates _,duration will _ the change in price.