Mispriced bond

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Reference no: EM1347515

1) Liquidity risk at a financial intermediary (FI) is the risk that promised cash flows from loans and securities held by FIs may not be paid in full.
incurred by an FI when the maturities of its assets and liabilities do not match. that a sudden surge in liability withdrawals may require an FI to liquidate assets quickly at fire sale prices. incurred by an FI when its investments in technology do not result in cost savings or revenue growth.
risk that an FI may not have enough capital to offset a sudden decline in the value of its assets.

2) An 12 year annual payment corporate bond has a market price of $925. It pays annual interest of $60 and its required rate of return is 7%. By how much is the bond mispriced?
$0.00
Overpriced by $7.29
Underpriced by $7.29
Overpriced by $4.43
Underpriced by $4.43

3) Plains National Bank has interest income of $250 million and interest expense of $110 million, noninterest income of $40 million and noninterest expense of $65 million on earning assets of $3,900 million. What is Plains' overhead efficiency ratio?
61.54%
44.00%
9.23%
42.45%
37.46%

 

Reference no: EM1347515

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