You bought a semiannual interest rate cap

Assignment Help Financial Management
Reference no: EM131049676

You bought a semiannual interest rate cap on $8 million notional with K = 3% (annually, rate quotes are almost always in annual terms). Today is one of the interest settlement dates and you realize that six months ago the (annual) LIBOR rate was 4%. What is your payoff?

Reference no: EM131049676

Questions Cloud

Interest per month on the unpaid balance : If you buy a computer directly from the manufacturer for $3,050 and agree to repay in 36 equal installments at 1.72% interest per month on the unpaid balance, How much are your monthly payments?
Determining the mobile communication technique : In a congested city which of the following mobile communication technique would you use?
E-loan an online lending service : E-Loan, an online lending service, recently offered 36 month auto loans at 3.6% to applicants with good credit ratings. If you have a good credit rating and can afford monthly payments of $347, how much can you borrow from A-loan? What is the total i..
Simple countdown for a webpage : You have been given a task to create a simple countdown for a webpage. Using JavaScript create a countdown time for the new year 2017. Attach necessary files and explain your code step-wise.
You bought a semiannual interest rate cap : You bought a semiannual interest rate cap on $8 million notional with K = 3% (annually, rate quotes are almost always in annual terms). Today is one of the interest settlement dates and you realize that six months ago the (annual) LIBOR rate was 4%. ..
The payoff of an interest rate libor floor : The payoff of an interest rate LIBOR floor (the opposite of a cap) is of the form max[K - Last period LIBOR rate), 0]. That is, if rates go below K, the option writer will pay the difference, nothing otherwise.
How many of each product should be manufactured : ACCOUNTING PRINCIPLES MANAGERIAL -TEST. How many of each product should be manufactured and sold to maximize the company's contribution margin based on the current production activity of 3,000,000 machine hours? What is the total contribution margi..
What is the value of the swap to the party paying sterling : A currency swap has a remaining life of 27 months. It involves exchanging interest at 10% on £20 million for interest at 6% on $30 million twice a year. What is the value of the swap to the party paying sterling?
Futures contracts for particular year trade : Suppose that there are no dividends paid by Google and the interest rate for borrowing or lending is 5% per annum. How could you make money if the June and December futures contracts for a particular year trade at $530 and $550, respectively? When wo..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Depreciation and amortization expense

Trevi Corporation recently reported an EBITDA of $31,200 and $9,500 of net income. The company has $6,600 interest expense, and the corporate tax rate is 35 percent. What was the company’s depreciation and amortization expense? Your Answer:

  No-growth common stock and share of preferred stock

A bond that pays interest forever and has no maturity date is a perpetual bond. In what respect is a perpetual bond similar to a no-growth common stock, and a share of preferred stock?

  About the sustainable growth rate

Last year Lakesha’s Lounge Furniture Corporation had an ROE of 18.2 percent and a dividend payout ratio of 24 percent. What is the sustainable growth rate?

  Ethical standard for corporations financial-tax reporting

Outline your findings on the ethical standard for a corporation's financial and tax reporting. State specific examples of the ethical standards and laws that you are following as the tax and financial analyst. Based on your research, state recent exa..

  Because of the adverse selection problem

Poor people have difficulty getting loans because _____. Financial intermediaries provide their customers with _____ Because of the adverse selection problem, _____

  The bonds make semiannual payments-risk-free rate

You are given the following information for Huntington Power Co. Assume the company’s tax rate is 35 percent. Debt: 6,000 7.3 percent coupon bonds outstanding, $1,000 par value, 15 years to maturity, selling for 109 percent of par; the bonds make sem..

  Assuming a constant debt–equity ratio

You’ve collected the following information about Odyssey, Inc.: Sales $ 165,000 Net income $ 12,600 Dividends $ 8,300 Total debt $ 66,000 Total equity $ 55,000 What is the sustainable growth rate for the company? Sustainable growth rate % If it does ..

  In case of a project that has multiple IRRs

In case of a project that has multiple IRR's:

  Find the finance charge-calculate the monthly payment

A finance company offers a 24-month installment loan with an APR of 13.5%. Robert wishes to use the loan to finance a delivery truck for $31,200. After using Table 13-1 from your text to find the finance charge, calculate the monthly payment.

  Compute the effective cost of not taking the cash discount

Compute the effective cost of not taking the cash discount under the following trade credit terms:

  Conventional and non-conventional cash flows

Of the capital budgeting techniques discussed, which works equally well with conventional and non-conventional cash flows and with independent and mutually exclusive project?

  What is the estimated return on the stock

Mark would like to purchase a stock priced at $70. Mark thinks he can sell the stock for $100 after one year. If Mark does not borrow any money from his brokerage firm, what is the estimated return on the stock?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd