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Company A, a low rated firm, desires a fixed rate, long term loan. Company A currently has access to floating-rate funds at a margin of 1.2% over LIBOR. Its direct borrowing cost is 13% in the fixed rate bond market. In contrast, Company B, which prefers a floating rate loan, has access to fixed rate funds in the Eurodollar bond market at 11% and floating rate funds at LIBOR + 0.50%.
(a) What’s the total cost savings can be realized?
(b) Suppose they(A and B) split the cost savings. How much would A pay for its fixed rate funds? How much would B pay for its floating rate funds?
(c) Suppose the intermediary bank gains profit of 0.1%, redo the above problem (ii)?
When the fed raises the federal funds rate, eventually there is.
When estimating the demand for tourism what are the relevant variable that must be included for the "generating are, and the destination area? Describe four major factors, other than price, likely to influence demand for a resort hotel in Acapulco.
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Microeconomics approaches the study of economics from the viewpoint of a. individuals or specific markets. b. the operation of the Federal Reserve. c. economy wide effects d. the national economy
Assume that a firm has the following short-run production function: q = 10L^0.5 and that the market wage rate is 4. Derive the equations for marginal and average product of labor. What is the equation for the firm’s short-run supply curve?
An industry demand curve faced by firms in a duopoly is P =69 - Q, where Q = Q1 + Q2. MC for each firm is 0 ( note: Marginal Revenue has twice the slope as the demand curve.) How many units should each firm produce? How much money will each firm make..
For the next two questions we will consider Rimor Bank, which has the following (partial) list of accounts on its balance sheet: Calculate the maximum amount of new money that Rimor Bank can create, by itself.
Why would a firm in a perfectly competitive market always choose to set its price equal to the current market price? If a firm set its price below the current market price, what effect would this have on the market? Discuss.
A jar contains 21 pink and 26 navy marbles. A marble is drawn at random.P(navy)Express the probability as a decimal. Round to the nearest hundredth.
Which of the follow is a characteristic of a command system?
the most important contributor to increases in the productivity of Americans labor over the 1929-2000 period was Illustrate what.
Economists forecast future economic conditions by studying variables that tend to fluctuate in advance of the overall economy. The most significant of these variables are known as leading indicators, and they compose the index of leading economic ind..
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