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a) Black Corp. currently has $65 million worth of floating rate debts carried at an average rate of LIBOR + 2.6% that it would like to hedge against rising interest rates without having to issue fixed rate bonds. Accordingly, they have approached Red Corp. (a swap dealer) about an 8-year interest rate swap with a notional value of $65 million. If Black can borrow in the fixed rate market at 5.15% and the swap rate is currently 2.35%, how much money will it be able to save from this arrangement each year (compared to simply issuing fixed rate bonds)?
b) What net payment is made to Black for a six month period in which LIBOR is 2.6%?
c) Briefly explain why banks do not require margin when they sell forward contracts
d) Briefly explain how Sojitz Corp. is attempting to naturally hedge its exposure to supply disruptions of rare earth elements (REEs)
Two years ago, Homeless People Ltd needed to accumulate a total of $600,000 by the end of four years to acquire new facility to house the homeless people in the city. To do so, Ho
NPV calculation if we have Initial investment 60000,life is 3 year, net working capital is 15000, sale is 75000 per year, variable cost is 1000 per year, fixed cost is 5000 per yea
Question: a) Differentiate between interest and currency swaps. b) You are the corporate treasurer of Quinnie International Inc. Your firm, rated as AAA, is able to raise
Assume that the average age of the worker is 25 years old. Typically, retirement is at 65. The firm provides a $2000 monthly payment for 25 years for retirees (i.e., 300 monthly
Financial Modelling Read carefully the case notes overleaf. Factor models on explaining firm's returns in a credit risk context. Is the usual one-factor model good enough?
Ask qCan the goal of maximizing the value of the stock conflict with other goals such as avoiding unethical or illegal behavior? In particular, do subjects like customer and employ
In this section, we will compare the ?ve forecasting methods using the case study data described in Section 4. Methods 1-3 will ?rst be compared for the full data set (assortment g
Initial investment 1950000 net cash flow 2075246 discount 15% find irr. Please solve in detail. regards thanks. .
#queM&A E-III Corp. is investigating the possible acquisition of Silicon Inc. Assume that both firms have no debt outstanding. E-III Corp. Silicon Inc. Pre-announcement stock price
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