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Please use the following additional information for Questions 38-41: A financial institution originates a pool of 500 30-year mortgages, each averaging $150,000 with an annual mortgage coupon rate of 8 percent. Assume that the entire mortgage portfolio is securitized to be sold as GNMA pass-throughs. The GNMA credit risk insurance fee is 6 basis points and that the FI’s servicing fee is 19 basis points. Question: What is the present value of the mortgage pool? 

The breakeven interest rate on a loan depends only on the loan’s probability of default and its loss given default (i.e. its salvage/recovery value).

Please use the following additional information for Questions 42-43: First Duration, a securities dealer, has a leverage-adjusted duration gap of 1.21 years, $60 million in assets, 7 percent equity to assets ratio, and market rates are 8 percent. Question: What conclusions can you draw from the leverage-adjusted duration gap in your answer to the previous question? 

Please use the following balance sheet for Questions 27-29: Suppose there are two ratings categories: A and B, along with default. The ratings-migration probabilities look like this for a B-rated loan: The yield on A rated loans is 5%; the yield on B rated loans is 10%. All term structures are flat (i.e. forward rates equal spot rates). A loan in default pays off 50%.   Question: Using the mean as the benchmark, compute the 1-year VaR with 95% confidence interval for the  loan (based on the actual distribution).

Moral hazard encourages the FI to take less, rather than more, risk. 

If the average maturity of assets is 5 years and the average maturity of liabilities is 7 years, then the FI has no interest rate risk exposure. 

The nurse should place a client who is vomiting in which position?

A nurse is preparing to take a rectal temperature. Which is the correct action?

The nurse is reinforcing discharge teaching about home safety. Which statement indicates a need for further teaching?

A nurse documents: “Patient walked 30 feet with assistance, reports feeling tired but denies pain.” This is an example of: