Assuming the group will settle the loan purchase by cash


OD Financial institution is considering buying a $4 million commercial loan to raise the existing average duration of its assets from four years to three years. According to the latest records of the group, the total assets are worth $20 million, with $5 million in cash (0 duration) and $16 million in loans. Assuming the group will settle the loan purchase by cash, should it purchase the loan if its duration is six years?

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Financial Management: Assuming the group will settle the loan purchase by cash
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