Conyers Bank holds U.S.Treasury bonds with a book value of $30 million.However,the U.S.Treasury bonds currently are worth $28,387,500. The bank's portfolio manager wants to shorten asset maturities.Which of the following statements is true?
A)The portfolio manager is reluctant to sell the bonds outright since the bank will have to take a loss.
B)The portfolio manager is willing to sell the bonds outright since they are not as valuable as their book value.
C)The portfolio manager is willing to sell the bonds outright since they are more valuable than their book value.
D)The portfolio manager is reluctant to sell the bonds outright since the bank will have to pay taxes on the gain.

Question

Quizplus · Accepted Answer

The fact that the U.S. Treasury bonds are currently worth less than their book value means that selling them outright will result in a loss for the bank. Therefore, the portfolio manager may be reluctant to sell them.

Conyers Bank Holds U