Third Duration Investments Has the Following Assets and Liabilities on Its

question 18

Multiple Choice

Third Duration Investments has the following assets and liabilities on its balance sheet. The two-year Treasury notes are zero coupon assets. Interest payments on all other assets and liabilities occur at maturity. Assume 360 days in a year.
-Using present value bond valuation techniques,calculate the exact price of the bond after the interest rate increase of 20 basis points.

• A)$1,007.94.
• B)$992.02.
• C)$992.06.
• D)$996.01.

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Definitions:

SAT Reasoning Test

A standardized test widely used for college admissions in the United States, assessing reading, writing, and math skills.

Stanford-Binet

The widely used American revision (by Terman at Stanford University) of Binet’s original intelligence test.

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A measure of intelligence test performance devised by Binet; the chronological age that most typically corresponds to a given level of performance. Thus, a child who does as well as the average 8-year-old is said to have a mental age of 8.

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