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1. Borrowing costs of two companies, A and B, in the fixed rate and floating rate markets are given below. Company B is a project and has raised floating-rate funds. It is looking into swapping its floating payment liabilities for fixed rate payment liability to manage its interest rate risk. Company A has raised fixed rate funds and is looking into converting its fixed rate liabilities into floating rate liability. Show how Companies A and B can achieve their objectives including their ability to lower the funding costs though an interest swap deal. 2. A-How does interest rate swap work as a tool for hedging interest rate risk assossiated with project financing? b- borrowing costs of a bank and a project are as follows:Fixed rate market Floating rate marketProject 7% Libor + 1%bank 5% Libor + 0.5%3. A cogeneration project which bought an equipment from a British for £800,000 on 3 month credit wants to hedge its accounts payable against currency risk. It is considering using either currency forward or currency options contracts. If the following information is available on these contracts, what would you advise them to use? Justify your recommendation.Forward contract: A three-month forward rate is $1.5400/£Options contract: A three-month £ call at strike price of 1.5300 is priced at $1.50/£A three-month £ put at strike price of 1.5300 is priced at $0.75/£
the fun foods corp. must decide on what new product line to introduce next year. after-tax cash flows are listed below
Stone Sour Corp. issued 15-year bonds 2 years ago at a coupon rate of 9.10 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM?
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.67; P0 = $27.50; and g = 8.00% (constant). What is the cost of common from retained earnings based on the DCF approach?
How can cash discounts improve collections? What are ramifications if an organization has too much cash on hand?
sustainable growth if the parodies corp. has a 16 percent roe and a 20 percent payout ratio what is its sustainable
Calculate the frontier for all possible investement combinations of Kalam Crop. and Adelphia Technologies (from 0% to 100%, in 1% increments). Determine the optimial risky portfolio if the risk-free rate is 3%.
Identify the fundamental distinction between a futures contract and an option contract, and briefly explain the difference in the manner that futures and options modify portfolio risk.
A shareholder has a $10,000 portfolio that is allocated as follows; short 100 shares of stock A, purchase 250 shares of B and 200 shares of 3. Any additional funds are borrowed at risk free rate of 0.04.
evaluate the various types of foreign currency transactions based on the difficulty in accounting for each type of
find annual interest raten 30 years quarterly paymentsinterest rate compounded quarterlypv 1200000pmt -90000fv
coogly company is attempting to identify its weighted average cost of capital for the coming year and has hired you to
Shaid company issued $2,000,000 of 6 percent, ten year convertible bonds on June 1st, 1993 at 98 plus accrued interest. The bonds were dated April 1st, 1993, with interest payable April 1st and October 1se. Bond discount is amortized semiannually on ..
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