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.)
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:
3) The typical duration of a Class B CMO is
1 - Spread is difference between bid and ask price. Because the stock is sold @ $26 and ignoring fee/expenses. Bally would receives ...
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.