Create lot of interest-rate risk for bank

Assignment Help Business Economics
Reference no: EM131377237

Banks often try to sell off their mortgage loans (usually 30 years in length) as soon as possible because of the interest-rate risk. Explain how a mortgage loan could create a lot of interest-rate risk for a bank.

Reference no: EM131377237

Questions Cloud

What is the elasticity of supply at the solution point : Demand for a good is Qd = 20,000 – 100 P. Supply is Qs = -1000 + 200 P. Find Q*, P*, consumer surplus, producer surplus, and total variable costs. Make a graph and label it. What is the elasticity of supply at the solution point? What is the elastici..
Excess supply of money or excess demand for money : Suppose the money supply is $1 trillion. The FOMC decides to use open market operations to reduce the money supply by $100 billion. If the required reserve ratio is .05, what does the Fed need to do to accomplish the reduction? Illustrate your result..
Farmer prefers having three cultivars over two cultivars : Consider a farmer faced with the option of choosing three different cultivars. Each has an independent probability of 0.10 of succumbing to disease. Determine whether the farmer prefers having three cultivars over two cultivars. What is the certainty..
Establish the marginal net benefit functions : You are a benevolent water manager who is tasked with assigning water to three different types of users: 1) Wheat farmers, 2) Town of Moscow, ID, and 3) Town of Pullman After extensive research from the econ department at WSU, you have been able to e..
Create lot of interest-rate risk for bank : Banks often try to sell off their mortgage loans (usually 30 years in length) as soon as possible because of the interest-rate risk. Explain how a mortgage loan could create a lot of interest-rate risk for a bank.
Find the economically efficient price and quantity : A water supplier faces demand characterized by inverse demand function p = 100 − 2q. The supplier has somewhat unusual cost structure that results in a marginal cost function of the form MC(q) = 44 − (3/5)(q). Show how you find the economically effic..
Using the t-accounts of the first national bank : Using the T-accounts of the First National Bank and the Second National Bank, describe what happens when George Clinton writes a $50 check on his account at First National to pay his friend Bernie Worrell, who in turn deposits the check into his acco..
Which pricing scheme maximizes total welfare : A public water utility is comparing two separate pricing schemes: (i) a two-tiered pricing scheme where the first 5,000 gallons cost $20 and all subsequent gallons cost $10 or (ii) a single price of $15 per gallon. Under scheme (i), how much water is..
Determine the current equilibrium price and quantity : A water utility for a growing city is considering expanding their capacity by investing in a larger system of wells. Their long-run marginal cost of water provision is characterized by the function MC(q) = 5 + 2 3 q (q is in thousands of gallons). De..

Reviews

Write a Review

Business Economics Questions & Answers

  Protect exporters in order to stimulate

Suppose a politician claims that "Since +I+G+NX, we should protect exporters in order to stimulate GDP". Is she correct? Why or why not?

  Eating avocado also crab dip with four crackers

Kathleen likes avocado also crab dip. After eating avocado also crab dip with four crackers, she switches to cheese with crackers.

  An increase in the assets of federal reserve banks

An increase in the assets of Federal Reserve banks will, An increase in excess reserves will cause, Consumption spending should increase if.

  Smoke without non-smokers being bothered by secondhand smoke

Under current law, smoking is banned on airplane flights within the United States. The government bans smoking because it believes that, when some people smoke, everyone on the airplane has difficulty breathing. Assume that this scientific conclusion..

  Use the loanable funds theory

Suppose that a war in other countries led to higher government spending in those countries and all else remains unchanged. Use the loanable funds theory to identify whether supply and/or demand changes in the non-warring countries.

  Illustrate what are elements of circular-flow diagram

Illustrate what are elements of Circular-Flow Diagram. Illustrate what concepts does diagram illustrate.

  Sticky-price model-the higher the average rate of inflation

Using the sticky-price model, the higher the average rate of inflation, the more frequently firms must adjust their prices, which implies that a high rate of inflation: Starting from long-run equilibrium in the dynamic model of aggregate demand and a..

  Although gdp is reasonably good measure of nations output

Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all transactions and production for that nation. Which of the following scenarios are either not accounted for or measured inaccurately by either the inco..

  A firm has a monopoly on a new type of gaming console

A firm has a monopoly on a new type of gaming console. The market demand is given by P=175.3-0.003*Q and thus marginal revenue is MR=175.3-0.006*Q. The monopolist's marginal cost is MC=5.2+0.001*Q. Calculate the profit-maximizing production quantity.

  Unintended consequences of government obstruction

Explain how the “incidence” (i.e. “Who pays the tax”) of a per-unit tax on transactions depends upon the slopes of the supply curve and the demand curve. You may utilize graphical analysis to explain your answer as well. What function do private prop..

  Including the supply curve of domestic producers

Jacob Viner originally envisioned a situation where, in the demand/supply graph of a trade-diverting customs union, the demand curve was vertical and all supply curves (including the supply curve of domestic producers) were horizontal. In this situat..

  Discourage twinkie consumption by raising the price

School tries to discourage Twinkie consumption by raising the price to $.40, by how much will Matt's mother have to increase his lunch allowance to provide him.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd