6. A financial institution has the following market value balance sheet: Assets Liabilities and Equity Cash $1,000 Certificate of Deposit $10,000 Bond $10,000 Equity $1,000 Total Assets $11,000 Total Liabilities and Equity $11,000 The bond has a 10-year maturity, a fixed-rate coupon of 10 percent paid at the end of each year, and a par value of $10,000. The certificate of deposit has a 1-year maturity and a 6 percent fixed rate of interest. The FI expects no additional asset growth…
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