DI has assets of $13 million consisting of $3 million in cash and $10 million in loans. It has core deposits of $5 million. It also has $4 million in subordinated debt and $4 million in equity. Increases in interest rates are expected to result in a net drain of $2 million in core deposits over the year. a-1. The average cost of deposits is 4 percent and the average yield on loans is 7 percent. The DI decides to reduce its loan portfolio to offset this expected decline in deposits. What is the cost to the firm from this strategy after the drain

Corporations with suppliers, vendors, and customers all over the globe are referred to as : a) global corporations b) international corporations c) multinational corporations d) multicultural corporations

The treasurer for pittsburgh iron works wishes to use financial futures to hedge her interest rate exposure. she will sell five treasury futures contracts at $139,000 per contract. it is july and the contracts must be closed out in december of this year. long-term interest rates are currently 7.30 percent. if they increase to 9.50 percent, assume the value of the contracts will go down by 20 percent. also if interest rates do increase by 2.2 percent, assume the firm will have additional interest expense on its business loans and other commitments of $149,000. this expense, of course, will be separate from the futures contracts. a. what will be the profit or loss on the futures contract if interest rates increase to 9.50 percent by december when the contract is closed out

Bond j has a coupon rate of 6 percent and bond k has a coupon rate of 12 percent. both bonds have 14 years to maturity, make semiannual payments, and have a ytm of 9 percent. a. if interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?