RBC requirements may induce bank managers to change their asset composition. Explain why. Determine how a shift from any of the following should affect a bank's required capital. How will each shift affect the bank's profit potential?
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Fenwicke Company organized and began operating a subsidiary in a foreign country on Jan. 1, 2015, by investing LCU 40,000. This subsidiary immediately borrowed LCU 100,000 on a 5-year note with 10 percent interest payable annually beginning on Jan 1,..
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Starting next year, you will need $10,000 annually for 4 years to complete your education, I.e one year from today you will withdrew the first $10,000. Your uncle will deposit an amount today in a bank paying 5% annual interest, which will provider y..
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A company has EAT, depreciation expense, capital expenses, debt and debt principal payments of $9m, $2.8m, $1.3m, $40m and $1.5m respectively. Between the first and the second years, it has current assets of $11m and $13.4m and current debts of $5m a..
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A bond with a coupon rate of 9 percent sells at a yield to maturity of 11 percent. If the bond matures in 15 years, what is the Macaulay duration of the bond? What is the modified duration?
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A 6 year capital projcect, code name Jackal, costs $27,695 (year 0). It is expected to produce the following operating cash flows (revenues minus expenses) Calculate the initial investment (year 0) cash flows for this project. If the Condor project h..
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Riverview Company is evaluating the proposed acquisition of a new production machine. The machine's base price is $200,000, and installation costs would amount to $28,000. Also, $10,000 in net working capital would be required at installation. The ma..
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The current spot exchange rate is $1.60=€1.00, the three moth US dollar interest rate is 2%, consider a 3 month call option on $62,500 of strike price of $1.50=€1.00 what is the last option should sell for?
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Warren Reed just turned 40. He has decided that he would like to retire when he is 65. He thinks that he will need $1,500,000 in special retirement accounts at age 65 to maintain his current lifestyle. For the next 15 years he can afford to put $12,0..
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WACC The current stock price for a company is $38 per share, and there are 4 million shares outstanding. The beta for this firms stock is 1, the risk-free rate is 4.2, and the expected market risk premium is 6%. If the corporate tax rate is 36%, what..
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Year-to-date, Oracle had earned a −1.34 percent return. During the same time period, Valero Energy earned 7.96 percent and McDonald's earned 0.88 percent. If you have a portfolio made up of 30 percent Oracle, 25 percent Valero Energy, and 45 percent ..
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The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: 2016 July 1 Issued $76,600,000 of 20-year, 8% callable bonds dated July 1, 2016, at a market (effective) rate of 9%, receiving cash of $69,552,279. ..
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