Suppose a Bank Has an Asset Duration of 5 Years

question 15

Multiple Choice

Suppose a bank has an asset duration of 5 years and a liability duration of 2.5 years. This bank has $1000 million in assets and $750 million in liabilities. They are planning on trading in a Treasury bond future which has a duration of 8.5 years and which is selling right now for $99,000 for a $100,000 contract. How many futures contracts does this bank need to fully hedge itself against interest rate risk?

• A) 3714 contracts
• B) 3125 contracts
• C) 2971 contracts
• D) 371 contracts
• E) 37 contacts

Describe the difference between langue and parole in structural linguistics.

Distinguish between different forms of power and control as discussed in postmodern theory.

Identify the fields where postmodern theory has made significant contributions.

Understand semiotics and its application across different symbol systems.

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Definitions:

Demand

The quantity of a good or service consumers are willing and able to purchase at various prices during a given period.

Price

The amount of money expected, required, or given in payment for something, reflecting the value agreed upon by both buyer and seller.

Consumption

is the process by which goods and services are used by individuals or businesses, ultimately leading to the satisfaction of human wants or needs.

Broad Stock Market Index

A financial index that tracks the performance of a wide range of stocks, representing a large segment of the equity market.