Gunnison Insurance has reported the following balance sheet (in thousands): Assets Liabilities and Equity 2-year Treasury note $195 1-year commercial paper $150 15-year munis $205 5-year note $185 Equity $65 Total Assets $400 Total Liabilities & Equity $400 All securities are selling at par equal to book value. The two-year notes are yielding 5 percent, and the 15-year munis are yielding 9 percent. The one-year commercial paper pays 4.5 percent, and the five-year notes pay 8 percent. All instruments pay interest annually. Question: What is the maturity gap for Gunnison? What is the dollar impact on the market value of equity? Assuming that all interest rates increase 2 percent. What is the dollar change in the total assets?
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Gunnison Insurance has reported the following balance sheet (in thousands):
Assets Liabilities and Equity 2-year Treasury note $195 1-year commercial paper $150 15-year munis $205 5-year note $185 Equity $65 Total Assets $400 Total Liabilities & Equity $400
All securities are selling at par equal to book value. The two-year notes are yielding 5 percent, and the 15-year munis are yielding 9 percent. The one-year commercial paper pays 4.5 percent, and the five-year notes pay 8 percent. All instruments pay interest annually. Question: What is the maturity gap for Gunnison? What is the dollar impact on the market value of equity? Assuming that all interest rates increase 2 percent. What is the dollar change in the total assets? |
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