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# Finance: Bally IPO proceeds;duration of a Class B CMO

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1) An investment banker agrees to a firm commitment offering of 1.2 million shares of Bally stock. The offer price is set at \$25.50 and the spread is 30 cents per share. If the stock is actually sold to the public at \$26.00, however, what is the amount of funds Bally receives? (Ignore any other fees or expenses.)
\$31,200,000
\$30,600,000
\$30,240,000
\$29,280,000
\$28,120,000

2) A bank has DA = 2.4 years and DL = 0.9 years. The bank has total equity of \$82 million and total assets of \$850 million. Interest rates are at 6%.

- If interest rates increase 100 basis points the predicted dollar change in equity value will equal:
\$10,171,698
-\$10,171,698
\$12,724,528
-\$12,724,528
\$4,928,756

3) The typical duration of a Class B CMO is
1.5-3 years
3-5 years
5-7 years
7-10 years
18-20 years

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#### Solution Preview

1 - Spread is difference between bid and ask price. Because the stock is sold @ \$26 and ignoring fee/expenses. Bally would receives ...

#### Solution Summary

The solution answers questions related to Bally IPO proceeds; change in equity value based bank's duration of assets & duration of liabilities; duration of a Class B CMO.

\$2.19