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1. Forward Rates Problems
Assuming in December of 2014, the term structure of Treasury securities included the following rates:
Security
Annualized Yield (%)
3-month bill
4.50
6-month bill
4.57
1-year note
4.52
2-year note
4.51
3-year note
4.48
a) The six-month annualized yield expected in the second half of year 2015 (forward rate for 6-month bill in June 2015)
b) The one-year expected yield for year 2017 (forward rate for 1-year note in December 2016)
c) Suppose the 8-year spot interest rate is 8 percent and the 3-year spot rate is 4 percent. What is the implied forward rate on a 5-year bond originating 3 years from now?
d) Suppose the 5-year spot interest rate is 6 percent. Under the expectation hypothesis the forward rate on a 3-year bond originating 2 years from now was estimated. The estimated forward rate is 5.5 percent. What is the 2 -year bond spot rate?
Capital Co. has a capital structure, based on current market values, that consists of 34 percent debt, 12 percent preferred stock, and 54 percent common stock. Calculate WACC after tax in percent.
Aqua ltd has a proposal for a project whose cost is Sh.50million and has an economic useful life of 5 years. It has a nil residual value. The earnings before depreciation and tax expected from the project are as follows:
The division has fixed costs of $10,000 per month, and it expects to sell 42,000 strips per month. If the variable cost per strip is $2.00, what price must the division charge in order to break even?
What was the total asset turnover? (Round your answer to 2 decimal places (e.g., 32.16).)
U.S. investors have $900,000 million to invest 1-year deposit rate offered by U.S. banks = 3.5% 1-year deposit rate offered on Australian $ = 3% 1-year forward rate of Australian $ = $0.64 Spot rate of Australian $ = $0.62
using the time value of money to compute the present and future values of single lump sums and annuitiesjanice wants to
How should the capital structure weights used to calculate the WACC be determined?
examine the role of management as it relates to finance in a corporation. in your post discuss the role of management
imagine that you are a financial manager researching investments for your client that align with its investment goals.
Debate the differences between an alert-based decision support management accountability budgeting, monitoring, and reporting system and a standard reporting system that does not provide instant management information to the decision makers.
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Consider two banks. Bank A has 1000 loans outstanding each for $100,000, which it expects to be fully repaid today. Each of Bank A's loans has a 6% probability of default, in which case the bank will receive $0 for each of the defaulting loans.
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