A company is planning to sell its 90-day commercial paper to investors by offering an 8.4 percentyield. If the face value of a three-month Treasury bill is GHS1000 which is also selling at GHS950,the credit risk premium is estimated to be 0.6 percent, and there is a 0.4 percent tax adjustment,then what is the liquidity premium on the commercial pape
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A company is planning to sell its 90-day commercial paper to investors by offering an 8.4 percent
yield. If the face value of a three-month Treasury bill is GHS1000 which is also selling at GHS950,
the credit risk premium is estimated to be 0.6 percent, and there is a 0.4 percent tax adjustment,
then what is the liquidity premium on the commercial pape
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- ABC Corporation wishes to raise money by selling a 90-day promissory note in the short-term money markets. The note promises to pay the holder $17,000,000 at maturity. If yields on similar risk notes are currently 2.8% p.a., how much money will ABC Corporation receive for the note? If the purchaser of the note holds it until maturity, what is the total amount of interest they will earn? For the purchaser in 2), what will be the return on investment (ignoring taxes)? Need help answering all these please!You purchase a T-bill (traded on Oct 2, 2020) at a price of 99.8% of face. The T-bill will mature on Dec 1, 2020. What is the bank discount yield of the T-bill? Write your answer to the nearest 0.01%, but without writing the %. For example, if your answer is 5.02%, put an answer of 5.02 into the box, not 0.0502.A supplier will give Shark Unibase Company a discount of 2% if an invoice is paid 60 days before its due date. Suppose Shark wants to take advantage of this discount but needs to borrow the money. It plans to pay back the loan in 60 days. What is the highest annual simple interest rate at which Shark Unibase can borrow the money and still save by paying the invoice 60 days before its due date?
- Can you please help me with this? A commercial bill with a face value of $50 000 has a current price of $49,291. This bill is trading at a yield of 7.5% which necessarily implies a time to maturity of how many days? (Just give the number) What would be the most certain formula to be used to solve this problem and why is it that formula? Also, are commercial bills subject to 360-day interest payment? How can the formula be used to solve the problem?Bank K is about to sign a loan agreement with a mining company.The current LIBOR rate is 8%.The risk premium for the company has been estimated as 3% and the origination fee will be 0.1875 percent.The bank will be requesting a 9% compensating balance requirement.If the reserve requirement is 6%,what is the promised gross return on the loan?An investment bank sells securities under a repurchase agreement for $800.438 million and buys them back in 7 days for $800.568 million. What is the repo's single payment yield?Report your answer in % to the nearest 0.01%;
- FINCORP has two debtors who each make a $10, 000 purchase. Debtor 1 pays their account in 10 days, while debtor 2 pays in 30 days. a) In simple terms, what nominal annual interest rate is debtor 2 incurring for the benefit of delaying payment? Note: base your answer on the following logic. If a borrower pays 3% for a 30-day loan, we could express the nominal annual rate as roughly 36.5% i.e 3% x 365/30 = 36.5% that payment is due within 30 days but debtors will receive a 5 percent discount if they pay within 14 days. I'm quite unsure if that 5% as it is a discount, is handy or the steps to calculate the nominal interest rateA one-year Treasury bill currently offers a 5% rate of return. A two-year Treasury note offers a 5.5% rate of return. Under the expectations theory, what rate of return do investors expect a one-year Treasury bill to pay next year?You are given a nominal annual rate of discount of 12% convertible (compounded) quarterly. Determine the present value on 1/1/2010 of $20,000 to be paid on 1/1/2015. Hint: Let X be the value on 1/1/2010. The future value is $20,000. Recall for an effective rate of discount, d, A(t) = Ap*(1-d)t. You will need to adjust your formula to reflect the fact that the given rate is a nomi O $11,000 but $11,250
- You purchase a three-month discount security (e.g., a Treasury bill or commercial paper) for $0.9878 on $1 (i.e., $98,780 for $100,000 face amount). What are the discount yield, the simple annual yield, and the annual compound yield earned by the investment?Your company needs to borrow $5 million in three months’ time for a period of 6 months (180 days). You are concerned that the changes in interest rates will be unfavorable. You approach an FRA dealer, who provides the following forward quotations: 3Mv9M(19): 9.75–8.55 3Mv6M(19): 9.65–8.45 Required: a) What will be the agreed rate if you enter an FRA agreement with this dealer? Explain your answer. b) Assuming the reference rate on the settlement date is 10 per cent, which party to the FRA is required to make a payment and why? c) Calculate the compensation amount on the settlement date. Show all calculations. d) List and briefly explain two advantages and two disadvantages of FRAs.What’s the equivalent interest rate to the terms 3/20, n/60? In other words, what is the effective annual rate that is "given" to a customer for this cash discount? (Use 365 days.) HINT: Use the I = P x R x T formula where R = I/PT and choose some value for the gross amount of the invoice (i.e $1,000). Label (%) and round to the nearest whole percent.