What is the value of the floating-rate bond

Assignment Help Financial Management
Reference no: EM131918882

The six month LIBOR is 15% per annum with continuous compounding for all maturities. Under the terms of an interest rate swap, SABIC Financial has agreed to pay 8% per annum and to receive six-month LIBOR in return on a notional principal of $150 Million with payments being exchanged every six months. The swap has a remaining life of fifteen months. The six-month LIBOR at the last payment date was 6% per annum.

1) When was the last (i.e., most recent) payment made?

2) What are the remaining payment dates?

3) What is the value of the fixed-rate bond?

4) What is the value of the floating-rate bond?

5) What is the value of the swap to SABIC Financial?

Reference no: EM131918882

Questions Cloud

What are the five levels of maslows hierarchy of needs : Now in your own words, list in order the needs that means the most to you, starting from most important to least important.
Alternative hypothesis in a complete sentence : State your null and alternative hypothesis in a complete sentence.
How can improving the components of fitness improve quality : Did the results of the squat endurance test surprise you? How can improving these components of fitness improve the quality of your life?
What are some aspects of quality improvement management : Identify the internal and external customers in a health care setting. List several componets that are used to determine the quality of care.
What is the value of the floating-rate bond : What are the remaining payment dates? What is the value of the floating-rate bond?
Justify the choice in recommendations : Your company markets antifreeze. Sales to consumers take place in a very short period, primarily September through December.
Provide an overview of the problem and a detailed plan : Can you describe a vision for the future - what outcome do you want to achieve?What is causing the problem and what is the context?
About the business you would like to start : Suppose that after you graduate from Berkeley College, you decide to start your own business. Tell us about the business you would like to start.
Describe any gaps in knowledge that you found : Describe any gaps in knowledge that you found and the effects this may have on nursing practice as it relates to your change project topic.

Reviews

Write a Review

Financial Management Questions & Answers

  The interest rate environment is highly volatile

The treasurer of the Atlas Corporation, Wanda Zinke, is going to bring a $10 million issue to the market in 45days. It will be a 25-year issue. The interest rate environment is highly volatile, and even though interest rates are currently 10.25 perce..

  Calculate the present value of the generated cash flows

Your company will generate $48,500 in cash flow each year for the next twelve years from a new information database. The computer system needed to set up the database costs $274,000. Calculate the present value of the generated cash flows.

  Decrease in price-holding all other things equal

Assume that all interest rates in the economy change from 7 percent to 8 percent. A 3, 4, or 10-year bond will have the least percentage increase or decrease in price, holding all other things equal.

  Early withdrawal penalty

A certificate of deposit often charges a penalty for withdrawing funds before the maturity date. If the penalty involves three months of interest, what would be the amount for early withdrawal on a $31,000, 4 percent CD?

  Discuss intellectual property and the major issues

Discuss intellectual property and the major issues it has on international trade negotiations.?

  Requires initial fixed asset investment

Sextet Corporation is considering a new three-year expansion project that requires an initial fixed asset investment of $2.94 million.

  What effect did FIRREA have on the prior regulations

The Savings and Loan crisis of the late 1980s is discussed in the book – a bit. What effect did FIRREA have on the prior regulations?

  What is minimal annual inventory cost of current strategy

Harley Davidson purchases components from three suppliers. Components purchased from Supplier A are priced at $ 5 each and used at the rate of 200000 units per year. Components purchased from Supplier B are priced at $ 4 each and are used at the rate..

  Target capital structure-determine their cost of capital

Bartlett Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after tax cost of debt is 6%, the cost of preferred is 7.50%, and the cost of common using reinvesting earnings will be $800,000. You were hired as a c..

  What factors must you consider in making your decision

You can put the money in a money market account at your bank and pay off your car loan, or you can invest the money in mutual funds. What factors must you consider in making your decision?

  Calculate the variance of portfolio of the three securities

Suppose you purchased $1,000 of Stock A with your own money. You then borrowed $500 and used this money to buy Stock B. This means that the portfolio weights are as follows: wA = 1000/1000 = 1.00; wB = 500/1000 = 0.50; wC = -500/1000 = - 0.50. Calcul..

  What is effective annual cost of trade credit

Your supplier offers terms of 3?/20?, net 50. What is the effective annual cost of trade credit if you choose to forgo the discount and pay on day 50?

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