The Average Duration of the Loans Is 10 Years -What Is the Number of T-Bond Futures Contracts Necessary to Average

question 80

Multiple Choice

The average duration of the loans is 10 years. The average duration of the deposits is 3 years. $$\begin{array} { | l | r | l | r | } \hline \text { Consumer loans } & \$ 50 \text { million } & \text { Deposits } & \$ 235 \text { million } \\\hline \text { Commercial Loans } & \$ 200 \text { million } & \text { Equity } & \$ 15 \text { million } \\\hline \text { Total Assets } & \$ 250 \text { million } & \text { Total Liabilities \& Equity } & \$ 250 \text { million } \\\hline\end{array}$$
-What is the number of T-bond futures contracts necessary to hedge the balance sheet if the duration of the deliverable bonds is 9 years and the current price of the futures contract is $96 per $100 face value and if basis risk shows that for every 1 percent shock to interest rates, i.e., ?R/(1 + R) = 0.01, the implied rate on the deliverable bonds in the futures market increases by 1.1 percent, i.e., ?R_f/(1 + R_f) = 0.011?

• A)1,500 contracts.
• B)1,888 contracts.
• C)2,100 contracts.
• D)2,408 contracts.
• E)3,100 contracts.

Recognize the importance of inclusivity and respect towards all sexual orientations and gender identities.

Understand the concept and implications of sexual labelling and stigma.

Compare and contrast different sexual identities and orientations.

Examine the role of non-monogamy in modern relationships and its societal implications.

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Definitions:

False Memories

Distorted or fabricated recollections of events that did not actually happen, often influenced by suggestions or the merging of different memories.

Hypnotic Suggestion

Hypnotic suggestion involves delivering instructions or suggestions to a person under hypnosis, potentially influencing their thoughts, behaviors, or perceptions.

Memory Distortion

The alteration of a memory or the introduction of inaccuracies into a memory over time, which can significantly impact how the memory is recalled.

Source Amnesia

A memory disorder in which someone can remember certain information, but not how, when, or where they learned that information.