Is this contract a notional principal contract

Assignment Help Financial Management
Reference no: EM132014371

Party A and B enter into a contract. The contract is based on notional amount of $50 million. A pays 1 year LIBOR and B pays a fixed rate 5% .In year 1, LIBOR is 4% and payments are made annually. A and B entered into the swap on September 1, 2016. A and B are both calendar year taxpayers.

A. Is this contract a notional principal contract?

B. Are the payments periodic?

C. How much income and expense do A and B have in 2016

D. Would the answer in C change if A was a cash method taxpayer?

Reference no: EM132014371

Reviews

Write a Review

 

Financial Management Questions & Answers

  Consist entirely of current assets-net plant and equipment

The assets of Dallas & Assoc. consist entirely of current assets and net plant and equipment. The firm has total assets of $ 2,606,694 and net plant and equipment of $ 1,103,618. The company has notes payable of $ 140,331, long-term debt of $ 823,770..

  Get the expected return and volatility of the portfolio

You have $10,000 to invest. You decide to invest $20,000 in Google and short sell $10,000 worth of Yahoo! Google expected return is 15% with a volatility of 30% andYahoo!'s expected return is 12% with a volatility of 25%. The stocks have a correlatio..

  Stock values-dividend yield and capital gains yield

The next dividend payment by Dizzle, Inc., will be $3.20 per share. The dividends are anticipated to maintain a growth rate of 6.75 percent, forever. Assume the stock currently sells for $50.00 per share. What is the dividend yield? What is the expec..

  Preferred stock-common stock and market

The Saunders Investment Bank has the following financing outstanding. Debt: 120,000 bonds with a coupon rate of 8 percent and a current price quote of 110.0; the bonds have 20 years to maturity. Preferred stock: 210,000 shares of 6 percent preferred ..

  Calculate financial ratios of the corporation

Shareholder Wealth Maximization : TATA MOTORS & Nirma ratio analysis-Calculate and analyze the following thirteen financial ratios of the corporation and compare them to the appropriate industry average:  Current ratio, Quick ratio

  Equation to forecast broussards additional funds

Broussard Skateboard's sales are expected to increase by 15% from $7.4 million in 2015 to $8.51 million in 2016. Its assets totaled $5 million at the end of 2015. Broussard is already at full capacity, so its assets must grow at the same rate as proj..

  Support its expected growth

Kampfire estimates that it needs $25 million to support its expected growth.

  Find the concept of perfect society or utopia so useful

How does Plato's conception of an ideal government differ from that of Aristotle's? Why do you think Plato, and philosophers in general, find the concept of a perfect society, or utopia, so useful?

  How many shares will he own after the reverse stock split

Worst Buy Company has had a lot of complaints from customers of late, and its stock price is now only $4 per share. It is going to employ a one-for-six reverse stock split to increase the stock value. Assume Dean Smith owns 108 shares. How many share..

  What is the maximum possible subscription price

What is the maximum possible subscription price?

  Mutual fund-the market index and the risk-free rate

Consider the following information for a mutual fund, the market index, and the risk-free rate. You also know that the return correlation between the fund and the market is .97. Year Fund Market Risk-Free 2008 –15.13 % –25.5 % 2 % 2009 25.1 19.6 4 20..

  Value of each option using no-arbitrage arguments

The current price of a non-dividend-paying stock is $40. Over the next six months it is expected to rise to $42 or fall to $37. An investor buys put options with a strike price of $41. The risk-free interest rate is 2% per annum with continuous compo..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd