Please type the answer by computer, so i can see it clearly, thank you!!! Explain the tradeoff between liquidity and reinvestment risks of lending a fixed-rate mortgage loan. (please more details)
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Please type the answer by computer, so i can see it clearly, thank you!!!
Explain the tradeoff between liquidity and reinvestment risks of lending a fixed-rate mortgage loan. (please more details)
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- Question 5.A bank has borrowing needs at timeT >0. Show that by combining an FRAtrade today with a libor loan at timeT, the bank can today lock in its interest cost forthe periodTtoT+α. Does the borrowing bank need to buy or sell the FRA to do this?What is the fixed rate that the bank locks in?4(B) investigate and compare investment options, including stocks, bonds, annuities, certificates of deposit, and retirement plans I Can state costs and benifits of credit cards and mortgages. Write a few sentences on what you know and what you might learn8. How do rising interest rates affect the size of real estate loans that lenders will advance?Again, be specific.
- Please answer fast. 17: reading securitization which one of the among assertions is false: A: Collateralized mortgage obligation involves SPV B: CDO is a debt instrument where the collateral for the promise to pay is an underlying pool of the debt of obligation and even after the CDOs. C: All the assertions are correct D: When an insurance company seeks to reduce its loan exposure on its balance sheet it uses an arbitrage CDO. E: Mortgage pass-through security is a type of Mortgage-backed security but does involve SPV4. In the lending operations, how many types of loan security? Which one is most popular1.) A bank has purchased a significant amount of loan receivables of another bank. The loan portfolio is made up of several home mortgages, making it essentially a mortgage-backed security. The investing bank has created its cashflow forecast from the receivable but faces the risk that if interest rates decline, principal payments will be made earlier and that interest collections will not happen. What risk does the bank face?* A.)Mortgage Default Risk B.) Mortgage Prepayment Risk C.) Mortgage Settlement Risk D.) Mortgage Extension Risk 2.) The mortgage contract states that the debtor must pay a minimum of P100,000 per year on the 7% interest, P1,000,000 loan. The balance would be due by the end of the tenth year as a lump sum. A.) Balloon payment mortgage B.) Rollover mortgage C.) Home equity loans D.) Construction to permanent mortgages 3.) Which of the following would have inflationary effect on the economy? [1] BSP releasing new bonds in the market [2] BSP decreasing the repo…
- 26. ‘Intermediaries, by managing the deposits they receive, are able to make long-term loans while satisfying savers’ preferences for liquid claims.’ This statement is referring to which important attribute of financial intermediation? A. Asset transformation B. Credit risk transformation C. Maturity transformation D. Denomination transformationQ5. Corporates needs business loans for their day to day operations, suppose you are workingin credit department in Private Sector Bank and a customer approach you for taking termloan, the basic characteristics of term loans are that term loan commitments are of long term.as a banker how would you decide whether to provide him a term loan or not? Along withthis also explain the documents required for term loan by customer?Prove the loan payment formula, shown below. PMT=Prn1−1+rn−nt Question content area bottom Part 1 Manipulate the formula shown below to prove the loan payment formula. The left side of the equation is the future value of the principal amount and the right side is the future value of the loan payments. First, solve the equation for PMT. P1+rnnt = PMT1+rnnt−1rn
- Give typing answer with explanation and conclusion Q. 23 Why do commercial banks focus on relatively short-term loans? - b/ short term loans allow rapid turnover of cash flows - a/ short-term loans are safer - a,b, and c - c/ these banks need to coordinate their portfolio with changes in economic conditions and the level of interest rates - b and cSpreadsheet Problem. Refer to the Ch10_Mort Eq Cap tab in the Excel Workbook provided on the Web site. This replicates the example discussed on page 314 of the book.a. Suppose there is an aggressive lender that is willing to allow the debt coverage ratio (DCR) to be as low as 1.0. Keep all other assumptions, including the loan interest rate and equity discount rate (before-tax equity yield), the same. How does this affect the amount that can be borrowed and the property value?b. Refer to part (a). Is it reasonable to assume that the loan interest rate and equity discount rate would be the same? If not, would you expect each to be higher or lower? Why?QUESTION 9 The interest rate charged on secured short-term loans to a corporation is generally higher than that charged on unsecured short-term loans because ... the risk of default is lower on secured loans. secured loans are less risky than unsecured loans. it is costly to negotiate and administer secured loans. lenders of secured loans must pay more for their funds.