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You work in the finance department of a government MBS issuer. Your boss just asked you and the other members of the finance group to read the newspaper article "Banks Bundled Bad Debt, Bet Against It and Won." Your boss wants you and the rest of the group members to comment on the article.
Your boss wants to know what kind of ABS and derivatives are mentioned in the article.
He also wants to understand if you think the creation of the financial products exacerbated the credit crisis of 2007 (use at least two examples) and the likely impact on the credibility of the ABS market of the investment firms' activities as highlighted in the article.
Your Discussion Board posts must include 3 original posts of at least 300 words addressing each of the three queries, as well as at least 6 responses of 200 words each to other students' posts.
Locked-In Real Estate (LIRE) is preparing for their Initial Public Equity Offering (IPO). With its holdings consisting of rent controlled apartments, and no plans for expanding, LIRE plans to payout all of its earnings as dividends. These dividends a..
A bond has a $1,000 par value, 20 years to maturity, a 6.5% semi-annual coupon, and sells for $1,037.25. Find the yield to maturity. Find the current yield.
Calculate Company A's weighted average cost of debt given the following information: (a) Tax Rate: 20%. (b) Average Price of Outstanding Bonds:
You are asked to estimate after tax cost of debt financing. It can issue 29 years to maturity bonds with a coupon rate of 10.57% paid annually, and par value of $1000. The bonds can be sold now at a price of $1,160 each. Marginal tax rate is 35%. The..
Calculate the net present value of the proposed change, that is, the net benefit or net loss in present vaklue terms of the proposed changeover.
Midnight Hour Inc., has declared a $6.30 per-share dividend. Suppose capital gains are not taxed, but dividends are taxed at 25 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Midnight Hour sells for $83 ..
Imagine a corporation with $1,000,000 of assets and a debt ratio of 40%. ROE (return on equity) is expected to be 20% for the foreseeable future. Assume the firm keeps the same amount of debt indefinitely (as opposed to keeping the same debt ratio).
A 5-year corporate bond has an 8 percent yield. A 10-year corporate bond has a 9 percent yield. The two bonds have the same default risk premium and liquidity premium. The real risk-free rate, r*, is expected to remain constant at 3 percent.
On January 1st, an investment is worth $100. On April 19th, the value is $95 and $2X is deposited right afterwards. On October 30th, the value is $105 and $X is deposited right afterwards. On January 1st of the following year, the investment is worth..
Obtain the closing price, the change in price from the previous day, and the beta and calculate the return on holding the stock for a day.
International Finance Problem
Fee Founders has perpetual preferred stock outstanding that sells for $48.00 a share and pays a dividend of $4.00 at the end of each year. What is the required rate of return?
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