Marketable securities portfolio but with interest rates up

Assignment Help Financial Management
Reference no: EM13830598

Ralph, a treasurer for Ma nd M products, Inc., recently updated his firm's short-term cash forecast only to discover that the firm will suffer a cash shortabe of $15 million for a period of 30 days. One alternative is to liquidate a portion of his marketable securities portfolio but with interest rates up, this is not a good alternative. Ralph just learned from one of his comercial paper dealers that paper in the theirdy-day range is in demand and that asked discout rates are comparably good at about 3.7 percent. The dealer's annual fee is 10 basis points and the annual commitment fee on a back up line of credit is 25 basis points. 

a. estimate the effective cost of the commercial paper assuming that this is only commercial paper issue planned for the year. 

b. estimate the effective cost of the commercial paper assuming that there will be recurring issues of commercial paper all year long. 

 

 

Reference no: EM13830598

Questions Cloud

How much would the us pay the french company : How much would the U.S. pay the French company? Since there is a huge difference, what are the tactics they played to justify their claims? What dramatically changed the whole situation so the U.S. won the negotiation
Collection of popular erp system : Dynamics is a collection of popular ERP system used by many organizations. Dynamics offer five primary products, each includes one or more model.
Development of genetic engineering : The development of genetic engineering has been hailed as a second Industrial Revolution. Do you believe this label is justified? How many products or applications of genetic engineering can you think off?
Discuss each part of the formula : 1. Discuss each part of the formula 2. how changes in exchange rates effect values.
Marketable securities portfolio but with interest rates up : Ralph, a treasurer for Ma nd M products, Inc., recently updated his firm's short-term cash forecast only to discover that the firm will suffer a cash shortabe of $15 million for a period of 30 days. One alternative is to liquidate a portion of his ma..
Adjusting journal entries : Adjusting journal entries
Effectively read and compare two food labels : Explain the purpose or objectives of reading and comparing food labels.  State your hypothesis.  For example, which juice product do you think will be the most nutrient dense and which will contain the most empty calories?
Convert to pesos to cover the operating expenses : Break-even Financing. Lakeland, Inc., is a U.S.-based MNC with a subsidiary in Mexico.  Its Mexican subsidiary needs a one-year loan of 10 million pesos for operating expenses.  Since the Mexican interest rate is 70 percent, Lakeland is considering b..
Evaluate how state-level foreign policy decisions influenced : Evaluate how state-level foreign policy decisions in the United States are influenced by global factors. Assess how the United States as a hegemonic influences state-level decisions in other countries

Reviews

Write a Review

Financial Management Questions & Answers

  What is the extent of liability for the consumers

Joel, a former employee of Network Bank, an online bank, decided to exact some revenge. Though his official access to the bank's records was removed, he was able to hack into the bank's database of customer information, obtaining passwords associated..

  Reward-to-risk ratios for stocks

Stock Y has a beta of 1.4 and an expected return of 15.2 percent. Stock Z has a beta of .7 and an expected return of 9.1 percent. If the risk-free rate is 5.4 percent and the market risk premium is 6.4 percent, the reward-to-risk ratios for stocks Y ..

  In a three- to five-page paper not including title and

in a three- to five-page paper not including title and reference pages select a service organization to use as an

  Retirement fund

You want to earn the equivalent of $3500 per month over the expected 25 years of your retirement. You plan to retire in 40 years and can earn 12% on your savings till retirement and 8% on the retirement fund once you retire. How much will you have to..

  What are the positive and negative treads for truvia

Have you ever heard of Truvia? What are the competitors to Truvia? Is Stevia just a fad or a long term product? What are the positive and negative treads for Truvia?

  Calculate the options exercise value

Calculate the options exercise value? What is the significance of this value and why is an investor willing to pay more than the exercise value for the option

  Compute net paid holidays worked for a full-time employee

the metropolis health system managers are also working on their budgets for next year. each manager must annualize his or her staffing plan, and thus must convert staff net paid days worked to a factor.

  Discounted cash flow estimate of the projects npv

Huntsman Chemical is a relatively small chemical company located in Port Arthur, Texas. The firm’s management is contemplating its first international investment, which involves the construction of a petrochemical plant in São Paulo, Brazil. The prop..

  Jessica alba a famous actress starts the baby and family

jessica alba a famous actress starts the baby and family products business the honest company with christopher gavigan.

  What is the operating cash flow or ocf

The Losers company has sales of 19,500, costs of 17,300, depreciation expense of 1650 and interest expense of 1460. If the tax rate is 35 percent, what is the operating cash flow or OCF?

  A critical assessment of the capital asset pricing model

a critical assessment of the capital asset pricing model capmyou are required todescribe the capital asset pricing

  Mutual life insurance has a risk-based capital ratio

Ashley is an actuary who is employed by the Nebraska Department of Insurance. Her duties include monitoring the financial position of insurance companies doing business in Nebraska. Based on an analysis of annual financial statements that insurers ar..

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