Should he discount the b a or hold it to maturity?

Assignment Help Finance Basics
Reference no: EM131114398

The time from acceptance to maturity on a $1,000,000 banker's acceptance is 120 days. The importer's bank's acceptance commission is 1.75 percent and the market rate for 120-day B/As is 5.75 percent. What amount will the exporter receive if he holds the B/A until maturity? If he discounts the B/A with the importer's bank? Also determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter. If the exporter's opportunity cost of capital is 11 percent, should he discount the B/A or hold it to maturity?

Reference no: EM131114398

Questions Cloud

Discuss the twin objectives of taxation : Discuss the twin objectives of taxation. Be sure to define the key words.
Purchases recorded gross and net some of the transactions : Purchases Recorded Gross and Net some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.
American machine tools might be able to make the machinery : If something cannot be arranged, the firm will likely be forced to lay off some of its skilled workforce. Is there a way that you can think of that American machine Tools might be able to make the machinery sale to Moldova?
Inventory adjustments dimitri company : Goods were in transit from a vendor to Dimitri on December 31, 2010. The invoice cost was $76,000, and the goods were shipped f.o.b. shipping point on December 29, 2010.
Should he discount the b a or hold it to maturity? : Also determine the bond equivalent yield the importer's bank will earn from discounting the B/A with the exporter. If the exporter's opportunity cost of capital is 11 percent, should he discount the B/A or hold it to maturity?
Various inventory issues the following independent situation : What is Donovan's Inventoriable cost for 2010? Answer each of the preceding questions about inventories, and explain your answers.
What is different about asia compared to europe and america : For foreign exchange trading, what is different about Asia, compared to Europe and the America? Do you think that this difference is surprising?
Expected return and the variance of the return : What are the expected return and the variance of the return on an equally weighted portfolio of all N securities? Please, note that the variance is presented by the formula, which depends on N.
Dollar value lifo the following information relates : Dollar-Value LIFO The following information relates to the Choctaw Company. Use the dollar-value LIFO method to compute the ending inventory for Choctaw Company for 2007 through 2011.

Reviews

Write a Review

Finance Basics Questions & Answers

  By how much will the cost of equity increase

By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.60? Answer A. 0.88% B. 1.07% C. 1.50% D. 2.10% E. 2.26%

  Describe the fed''s objective function

7, Describe the Fed's objective function and how it can be used with an economic model to evaluate alternative monetary policies. #8, Why didnt policy based on the phillips curve work to help the fed reduce the unemployment rate to a lower level than..

  True or false question based on investment plan

Senior management of Baldwin meets to estimate their investment plan for the year. They decide to fully fund a plant and machine buy through issuing 50,000 shares of stock plus a new bond issue.

  How was your firm affected by the government bail out it

effects of fiscal policythink about how fiscal policy can effect your firm microsoft corporation. please address the

  Computing future value of given stock

A company has announced growth rate of its dividend going forward will be 2% annually forever. The dividend in year 4 will be $3.00. The discount rate on the stock is 10%. What will stock price be in year 18?

  Find the forecasted levels of balance sheet

EEM, Corporation has the following balance sheet, It has determined the following relationships between sales and the various assets and liabilities that vary with the level of sales.

  Prepare a report see below using the numerical methods of

the motion picture industry is a competitive business. more than 50 studios produce a total of 300 to 400 new motion

  Determine the expected value of return

X comapny is planning the pruchase of one of two microfilm cameras, R and S. Both should provide benefits over a 10-year period, and each requires an initial investment of $4,000.

  Some money and securities from an unlocked safe

Michael owns a television repair shop that is insured under a commercial package policy. The policy includes the building and personal property coverage form and the causes-of-loss broad form. The declarations page indicates that coverage applies ..

  Assignment-key concepts in economics

Identify at least four (4) key points of a relevant economic article from either the Strayer Library or a newspaper. The article must deal with any course concepts covered in Weeks 1-8.

  An aggressive growth no-load mutual fund

Two Years ago, Stephanie Johnason, from Berkeley, California invested $1000 by buying 125 ($8 per share NAV) in the Can't Lose Mutual Fun, an aggressive growth no-load mutual fund.  Last year, she made two additional investments of $500 each (50 shar..

  Explain the difference between nopat and net income which

explain the difference between nopat and net income. which is a better measure of the performance of a companys

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