What is the cash flow to the floater class when libor

Assignment Help Financial Management

Reference no: EM131185428

A F/IF security is created with $20,000,000 in principal and a WAC of 7%. 40% of the principal is allocated to the floater class and the remainder is allocated to the inverse floater class. The floater class will receive LIBOR+50bp

A. What interest rate will be paid to the inverse floater class when LIBOR is at 4%?

B. What is the cash flow to the floater class when LIBOR is at 12%?

C. What is the maximum cap rate payable to the floater class?

D. If instead the principal was allocated 50/50 amongst the floater/inverse floater classes, would the max cap to the floater class increase, decrease, or remain the same?

Reference no: EM131185428

Questions Cloud

Architectural principle that form follows function : Briefly compare and discuss Louis Sullivan’s architectural principle that “form follows function” with Frank Lloyd Wright’s principle as follows: “Form follows function—that has been misunderstood. Form and function should be one, joined in a spiritu..

Marginal cost of capital will it incur to raise needed funds : Futuristic Coiffures (FC) needs to raise $85,000 to purchase a new machine. FC knows its component costs of capital are rd = 5%, rps = 7%, rs = 11%, and re = 13%. If FC expects to generate $27,000 in retained earnings this year, what marginal cost of..

Indifferent between accepting the project and rejecting it : A project that provides annual cash flows of $18,300 for ten years costs $89,000 today. It has a required rate of return at 9% At what discount rate would you be indifferent between accepting the project and rejecting it?

Calculation present value and cash payment reduction : Please calculation the Present value and cash payment reduction. Instruction: Please show the clear calculation and interpretation. Homework question 3: Company A sells machinery to Company B. Company B agrees to pay Company A $200,000 at the end of ..

What is the cash flow to the floater class when libor : A F/IF security is created with $20,000,000 in principal and a WAC of 7%. 40% of the principal is allocated to the floater class and the remainder is allocated to the inverse floater class. The floater class will receive LIBOR+50bp. What is the cash ..

What is the first monthly payment : What is the first monthly payment (payment at t=1) for each of the following loans? Each loan is for a property bought for $500,000 with an 80% LTV ratio. LIBOR is currently at 2.5%

Projected external capital requirements : Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set up their new computers. If sales are projected to..

Lowers the costs of making transactions : More and more of the back office tasks for commodity traders and market makers can be easily automated which lowers the costs of making transactions. What is the effect of these technical changes on the bid-ask spreads between commodity buyers and se..

Is company capital intensity ratio the same or different : Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2013 to $9.2 million in 2014. Its assets totaled $5 million at the end of 2013. Broussard is already at full capacity, so its assets must grow at the same rate as project..

User Account

All Pages