Conyers Bank Holds Treasury Bonds with a Book Value of $30

question 195

Multiple Choice

Conyers Bank holds Treasury bonds with a book value of $30 million. However, the Treasury bonds currently are worth $28,387,500. The bank's portfolio manager wants to shorten asset maturities. Which of the following statements is true?

• A)The portfolio manager is reluctant to sell the bonds outright since the bank will have to take a loss.
• B)The portfolio manager is willing to sell the bonds outright since they are not as valuable as their book value.
• C)The portfolio manager is willing to sell the bonds outright since they are more valuable than their book value.
• D)The portfolio manager is reluctant to sell the bonds outright since the bank will have to pay taxes on the gain.
• E)None of these.

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Definitions:

Federal Government

The national government of a federal country, where powers are divided between the central authority and constituent political units (states or provinces).

Freedpeople

Formerly enslaved individuals who were emancipated during and after the American Civil War.

Forty Acres and a Mule

A post-Civil War promise made to African Americans to provide them with farmland and a mule to jump-start their new lives, which was largely unfulfilled.

Black Southern University

Historically black universities located in the Southern United States, established primarily to educate African-American students during segregation.