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Can a financial institution keep borrowers from engaging in risky activities if there are no restrictive covenants written into the loan agreement? What conflicts can develop for the financial institution when soliciting and investing the funds of private individuals? Discuss the nature of a financial institution's ethical obligation should Joe Q Investor say: "This is the investment I want and if you won't do this for me I'll take my money someplace else."(Objective 8.1)
A bank issues a $100,000 fixed-rate, 30-year mortgage with a nominal annual rate of 4.5 percent. If the required rate drops to 4.0 percent immediately after the mortgage is issued, what is the impact on the value of the mortgage? Discuss ethical considerations banks should have when recommending a specific type of mortgage to a client.(8.2, 8.3)
A bank adds a bond to its retained portfolio. The bond has a duration of 12.3 years and cost $1,109. Just after buying the bond, the bank discovers that market interest rates are expected to rise from 8 percent to 8.75 percent. What is the expected change in the bond's value? How does this affect the asset portfolio of the bond holder?(8.3)
Why does a lower strike price imply that a call option will have a higher premium and a put option will have a lower premium?(8.3)
If, at the expiration date, the deliverable Treasury bond is selling for 101 but the Treasury bond futures contract is selling for 102, what will happen to the futures price? Explain your answer. What causes this change to occur?(8.2)
Explain why greater volatility or a longer term to maturity leads to a higher premium on both call and put options.(8.1, 8.3)
If these keyboards are upgraded at a cost of $7,400, they could be sold for $20,000. Alternatively, the keyboards could be sold "as is" for $7,800. What is the net advantage or disadvantage of re-working the keyboards?
Cheng Inc. is considering a capital budgeting project that has an expected return of 25% and a standard deviation of 30%. What is the project's coefficient of variation?
Examine the role that regulation changes actually played in the unraveling of our finical system. Write an essay on the effect of regulation/deregulation in the recent finical crisis.
A bond closed at 102.25. The current yield is 10.4%. What is the annual interest?
Southwest Airlines
The company's costs (excluding depreciation and amortization) amounted to 61 percent of sales, and it had interest expenses of $392,168. What is the firm's depreciation and amortization expense if its tax rate was 34 percent?
In a PowerPoint presentation of 8 to 10 slides, provide your client with an overview of each of these types of investments. The presentation should be concise so that it does not overwhelm her.
Yoder Dairy has a capital structure of 40% debt and 60% equity with a tax rate of 35%. Yoder's beta (leveraged) is 1.25. What would the firm's beta be if it switched to a capital structure that used no debt, i.e., what is its unlevered beta based ..
Assume that U.S. six-month Treasury bills have an annualized rate of 6.2% while default-free Japanese bonds that mature in six months have an annualized rate of 5.0% and that interest rate parity holds.
suppose you know with certainty that the clark capital corporation will pay a dividend of 10 per share on ever january
watch the concept review video working capital management video located in thewileyplus assignment week 3 videos
As president of Madison Corp. your finance people tell you that Madison is 30% debt and 70% common stock. In addition they tell you the cost of the common stock is 11% and the cost of the debt is 5.0%. What is Madison's weighted average cost of ca..
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