Solution-What is the current value of obligation

What is the current value of obligation

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Assignment

1. Prepare a Statement of Financial Position of Jeddah Financial Corporation from the following details:

Cash	518,161
Federal Funds Sold and other investments	1,321,626
Advanced from Federal Home Loans	38,961,165
Securities Available for sale, at fair value	382,499
Securities sold under agreements to repurchase	5,000,000
Senior Debts	8,194,266
Loans held for sale	83,365
Mortgage backed securities with recourse held to maturity, at cost	1,168,480
Interest earned but uncollected	392,303
Premises and Equipment, net	403,084
Other Assets	?
Loans Held for Investment	117,798,600
Common Stock	30,804
Additional Paid in Capital	338,997
Retained Earnings	81,408,185

2. Dammam West Bank has an obligation to pay a fixed nominal amount of $ 150, 8 years from today. Assume that the appropriate annual interest rate for this instrument, denoted r, is currently 10%. Answer the following questions:

a) What is the current value of obligation
b) What will the value of obligating if the rate of interest is increased by 4%
c) What will be value of obligation if the rate of interest is decreased by 2%

3. For a bank to accept credit risk, it must expect to be paid either interest at a sufficiently large premium above the risk-free rate or an actuarially fair fee. Considering this fact, how will you determine credit risk premium.

Reference no: EM131694065

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What is the current value of obligation

Reference no: EM131694065

Reference no: EM131694065

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