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A Congresswoman introduces a bill to outlaw credit rationing by banks. The bill would require that every applicant be granted a loan, no matter how high the risk that the applicant would not pay back the loan. She defends the bill by arguing: There is nothing in this bill that precludes banks from charging whatever interest rate they would like on their loans; they simply have to give a loan to everyone who applies.
If the banks are smart, they will set their interest rates so that the expected return on each loan-after taking into account the probability that the applicant will default on the loan-is the same. Evaluate the Congresswoman's argument and the likely effects of the bill on the banking system.
Compare the most appropriate hedge to an unhedged strategy, and decide whether Carbondale should hedge its receivables position?
What is the effective cost of borrowing in this case? Assume that default is extremely unlikely. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places.
Describe how you would arrive at the optimal portfolio starting with diversified portfolios of stocks & bonds; and cash and considering and investor's utility function.
Formulate this lot sizing problem using a combination of variable indices, linear constraints, and stretch constraints.
Loans for multifamily properties with more that 50 units are currently available for 20 years at 7%. Borrowers can obtain and 80% loan. Investors in multifamily properties in this market demand 13% due to the current volatility of the market. What is..
The spot rate (current rate) for Japanese yen is 120 yen to the dollar, whereas the one- year futures rate is 115. If one-year interest rates in Japan are 4%, what is the implied one-year interest rate in the United States, assuming interest rate ..
Suppose that JR Cos. has a capital structure of 80 percent equity, 20 percent debt, and that its before-tax cost of debt is 9 percent while its cost of equity is 15 percent. If the appropriate weighted average tax rate is 30 percent, what will be ..
Glassmaker has pre-merger $5 in debt and $10 in equity. Rate on debt is 11%. The risk free rate is 6%. The tax rate is 40% . The levered beta is 1.36. The equity risk premium is 4%. What discount rate should you use to discount Glassmakers' free cash..
1. If a stock has a negative beta, can the CAPM still be used to determined the stock's required rate of return? 2. Does a balanced mutual fund tend to be more diversified than a stock mutual fund?
Also, Would real estate investment trust or mortgage real estate investment trusts be a better hedge against high inflation? Why or why not?
identify each of the following organizational characteristics with the organizational form or forms with which it is
What are the Lender's legal obligations if they decline an application due to the content of the credit agency file - Advise what procedure is involved and the associated costs to obtain a copy of your own file from each of these agencies on both an..
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