Borrowing rates firms can obtain for fixed rate debt

Assignment Help Financial Management

Reference no: EM131050313

Given the following: US Dollars Swiss Francs Firm LMN 10 pct. 7 pct. Firm XYZ 8 pct. 6 pct. The above borrowing rates represent the borrowing rates the firms can obtain for a five year fixed rate debt issue in U.S. dollars or Swiss francs. Suppose XYZ wishes to borrow Swiss francs and LMN wishes to borrow U.S. dollars. LMN demands a 10 pct cost of borrowing . First step is for XYZ to borrow $1000 at its 8 percent rate. Using a swap demonstrate, explain how the borrowing costs of each company could be reduced. Assume the spot exchange rate of 2 Swiss francs per dollar. EXPLAIN IN DETAIL PLEASE

Reference no: EM131050313

Questions Cloud

Spot price of crude oil-what was the net convenience yield : In January 201x, the spot price of crude oil was $45.65 a barrel and the one year futures price was $56.38 per barrel. The interest rate was about 0.15 percent. What was the net convenience yield? Interpret/explain that result. EXPLAIN IN DETAIL PLEA..

Find the capacitance per unit length of two wires : Find the capacitance per unit length of two wires of radii 1 cm separated by a distance of 1 m.

Futures on the imaginary country stock index traded : In May of 201X, six-month futures on the Imaginary Country stock index traded at 15,330. Spot was 13.743. The interest rate was 19 percent and the dividend yield was 4 percent. Were the futures priced fairly? PLEASE EXPLAIN IN DETAIL

What is the current value of at a discount rate : At the end of year 3, it will pay a final liquidating dividend of $15 a share. After that, the company plans to close its doors permanently. What is the current value of this at a discount rate of 15 percent?

Borrowing rates firms can obtain for fixed rate debt : Given the following: US Dollars Swiss Francs Firm LMN 10 pct. 7 pct. Firm XYZ 8 pct. 6 pct. The above borrowing rates represent the borrowing rates the firms can obtain for a five year fixed rate debt issue in U.S. dollars or Swiss francs. Suppose XY..

Discussion on organic food : Choose an organization form the following Industries:- Australian Dairy farmers, Hybrid car (choose one brand), Australian wool industry and Organic food

What conclusions can you draw about the hypothesis : A random sample of 20 welds results in = 153.7psi and s = 11.3 psi. What conclusions can you draw about the hypothesis in part (a)? State any necessary assumptions about the underlying distribution of the data.

Define each of the following as classical : Define each of the following as classical, empirical, or subjective probability. a. The probability that the baseball player Derek Jeter will get a hit during his next at bat.

Write a program to draw the koch curve at the kth step : (Hint: Starting with the farthest left vertex and going clockwise, write a difference equation relating the coordinates of a vertex with those of the preceding vertex, the length of the segment, and the angle that the line connecting the two conse..

User Account

All Pages