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Question 1 (Interest Rate Futures)
- It is March 10, 2011. The cheapest-to-deliver bond in a December 2011 Treasury bond futures contract is an 8% coupon bond, and delivery is expected to be made on December 31, 2011. Coupon payments on the bond are made on March 1 and September 1 each year. The term structure is flat, and the rate of interest with continuous compounding is 5% per annum. The conversion factor for the bond is 1.2191.
The current quoted bond price is $137. Calculate the quoted futures price for the contract.
Question 2 (Interest Rate Futures)
-Assume that a bank can borrow or lend money at the same interest rate in the LIBOR market. The 90- day rate is 10% per annum, and the 180-day rate is 10.2% per annum, both expressed with continuous compounding. The Eurodollar futures price for a contract maturing in 91 days is quoted as 89.5. What arbitrage opportunities are open to the bank?
Render an opinion to potential investors on the proper value of the securities being offered
What is the operating cash flow under the base-case scenario, what is the net income under the worst-case scenario and what is the net present value under the best-case scenario?
Construct a performa income statement for the first year and second year and calculate the sustainable growth.
1. in late 2000 lucent announced that revenues would be adjusted downwards by 679 million as a result of revenue
What is the value of this firm in its current all-equity state. What will the firm's value be after the recapitalization and what percent of the preferred stock dividend will be taxable, according to the U.S. tax code?
How will the current balance-of-payments position of the country affect its equity and debt markets in the short term?
Compute the ratio of net income to total assets for each year and comment on the trend (round your percentage answer to two decimal places).
If Shining Rock does not hedge these sales, what is the maximum amount of total revenue they could hope to receive based on prices over the past year? What is the minimum amount of total revenue they could hope to receive?
Find the EBIT-EPS Indifference point - What happens to the indifference point if the interest rate on debt increases and the common stock sales price remains constant
From a financial manager's perspective, WHY would this merger have been a value creating proposition? In other words, why are the two firms worth more together than apart?
What costs are relevant to decision making? How do managers overcome the natural tendency to consider historical and sunk costs when evaluating business alternatives?
Suppose your corporation has decided it must downsize the scope of its business. Which is the most important goal for the corporation?
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