Allright Insurance Has Total Assets of $140 Million Consisting of $50

question 85

Multiple Choice

Allright Insurance has total assets of $140 million consisting of $50 million in 2-year, 6 percent Treasury notes and $90 million in 10-year, 7.2 percent fixed-rate Baa bonds. These assets are funded by $100 million 5-year, 5 percent fixed rate GICs and equity.
-If rates increase 1 percent, what will be the change in value of the option position?

• A)-$1,660,525.
• B)+$1,660,525.
• C)-$2,430,511.
• D)-$765,253.
• E)+$2,430,511.

---

Definitions:

Hepatic Portal Veins

A vein that carries blood from the gastrointestinal tract and spleen to the liver, transporting nutrients and toxins to the liver for processing.

Superior Mesenteric Vein

A large vein that drains blood from the small intestine, ascending colon, and part of the transverse colon into the portal vein.

Amino Acids

Organic compounds that combine to form proteins, acting as the building blocks of life.

Korotkoff Sounds

The sounds that medical personnel listen for when they are taking blood pressure using a non-invasive procedure, which indicate the resumption of blood flow into the forearm.