196. Katarina has borrowed 300,000 from Trout Bank. Katarina will repay 100,000 of principal at the end of each of the first three years. Katarina will pay Trout Bank a variable interest rate equal to the one year spot interest rate at the beginning of each year. Katarina would like to have a fixed interest rate so she enters into an interest rate swap with Lily. Under the interest rate swap, Katarina will pay a fixed rate to Lily, and Lily will pay a variable rate to Katarina. The variable rate will be the same rate that Katarina is paying to Trout Bank. The other terms of the swap will mirror the loan that Katarina has. Which of the following statements is true? А. This is an accreting swap. В. The settlement period for the swap is three years. С. The notional amount for this swap is 300,000. D. Katarina and Trout Bank are counterparties to the swap. E. Lily is the receiver under the swap.

196. Katarina has borrowed 300,000 from Trout Bank. Katarina will repay 100,000 of principal at the end of each of the first three years. Katarina will pay Trout Bank a variable interest rate equal to the one year spot interest rate at the beginning of each year. Katarina would like to have a fixed interest rate so she enters into an interest rate swap with Lily. Under the interest rate swap, Katarina will pay a fixed rate to Lily, and Lily will pay a variable rate to Katarina. The variable rate will be the same rate that Katarina is paying to Trout Bank. The other terms of the swap will mirror the loan that Katarina has. Which of the following statements is true? А. This is an accreting swap. В. The settlement period for the swap is three years. С. The notional amount for this swap is 300,000. D. Katarina and Trout Bank are counterparties to the swap. E. Lily is the receiver under the swap.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Avishek has an interest only loan for $100,000.00 maturing in 9 years. The interest rate on the loan is 4.750% compounded daily. He will repay the loan by making quarterly interest only payments, and by also making quarterly deposits of $2,319.62 into a sinking fund paying r(26) = 4.000%. If he defaults just after making 13 loan payments, and the lender gets the balance in the sinking fund, how much money is the lender's net loss?
It asks how much Monica balance from Account 1 will be over 5.7 years. Round to two decimal places.
2. Simple versus compound interest Financial contracts involving investments, mortgages, loans, and so on are based on either a fixed or a variable interest rate. Assume that fixed interest rates are used throughout this question. Heather deposited $1,700 at her local credit union in a savings account at the rate of 9.8% paid as simple interest. She will earn interest once a year for the next 13 years. If she were to make no additional deposits or withdrawals, how much money would the credit union owe Heather in 13 years? O $3,865.80 O $5,731.65 O $1,882.93 O $266.60 Now, assume that Heather's credit union pays a compound interest rate of 9.8% compounded annually. All other things being equal, how much will Heather have in her account after 13 years? O $5,731.65 O $561.70 $1,866.60 O $3,865.80
Robert plans to take out a mortgage for a house he just bought for $1 million. Bank A is offering a 25-year mortgage at an annual percentage rate (APR), compounded monthly, of 4.5% and a 25% down payment. Bank B is offering a 30-year mortgage at an APR, compounded monthly, of 4.8% and a 10% down payment. (a) Calculate the monthly payment under Bank A's terms. (b) Calculate the monthly payment under Bank B's terms.
On September 12, Jody Jansen went to Sunshine Bank to borrow $4,200 at 8% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table) a. What interest will Jody owe on January 27? (Do not round intermediate calculations. Round your answer to the nearest cent.) Interest b. What is the total amount Jody must repay at maturity? (Do not round intermediate calculations. Round your answer to the nearest cent.) Maturity value
Jennifer has a 60-month fixed installment loan, with a monthly payment of $223.04. The amount she borrowed was $11,000.00 at 8.0% APR. A split second after making her 36th payment, Jennifer decided to pay off the remaining balance on the loan. What is the total amount due to pay off the balance? Use the actuarial method. If you use the Finance Charge Table 11.2, page 632, and the "unearned interest formula", page 635, in your textbook to solve this problem, the result will match exactly with one of the answers. If you use a spreadsheet to do the computation, your result will not match exactly with any of the answers, but it will differ only very little (mostly less than $1) from the "correct" answer. $4,788.06 $4,897.69 $4,931.79 $5,063.35
Zoey Bettincourt gets a $400,000 loan for a townhouse. She secures a 5/1 ARM at an initial interest rate of 2.75%. Her initial monthly payment is $1,632.96. After 5 years, the interest rate on her loan changes to 3.5%. Calculate her new monthly payment (in dollars) in year 6 of the loan. (Round your answer to the nearest cent. Assume the length of the loan is 30 years.)
Jamila wants to deposit OMR 5000 in a bank fixed deposit for 8 years. She has the following bank deposit options: a) Bank Muscat on maturity will give you OMR 6700. b) Bank Dhofar on maturity will give you OMR 6720. c) National Bank on maturity will give you OMR 6750. d) Help Jamila to find as to what rate of interest bank is offering
Please show full steps along with concept.
Val regularly deposits a certain amount K in a bank account which credits com-pound interest: If Val intends to pay K at the beginning of each quarter for 4years, how much should be this periodic payment if the sum of present valuesof all these payments is 15,000 at a nominal interest rate of 8% compoundedquarterly?
Zebulon wants to borrow money. He writes a note that guarantees that 360 days from now he will give an amount of $1818.00 to whoever brings back the note to him. Yolanda wants to invest. She ourchases the note from Zebulon. She pays $1800. After 30 days, Yolanda sells the notes to Walter for $1679.45. Walter keeps the note until maturity. (a) What is the simple interest rate earned by Yolanda? Note that negative rates may occur. When this happens it means that Yolanda lost money :( (b) What is the simple interest rate earned by Walter? (c) What is the simple interest rate at which Zebulon borrowed?
Am. 111.

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