CH012 Problem 1 . Your firm has just issued five- year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4%. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2%?

CH012 Problem 1 . Your firm has just issued five- year floating-rate notes indexed to six-month U.S. dollar LIBOR plus 1/4%. What is the amount of the first coupon payment your firm will pay per U.S. $1,000 of face value, if six-month LIBOR is currently 7.2%?

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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Chapter 12, Problem 3 IBM needs to raise $I billion and is trying to decide between a domestic dollar bond issue and a Eurobond issue. The U.S. bond can be issued at a coupon of 6.75 percent, paid semiannually, with underwriting and other expenses totaling 0.95 percent of the issue size. The Eurobond would cost only 0.55 percent to issue but would bear an annual coupon of 6.88 percent. Both issues would mature in 10 years. a. Assuming all else is equal, which is the least expensive issue for IBM? B. What other factors might IBM want to consider before deciding which bond to issue?
Question 4: Chapter 1 On 1 October 20X3, Shanghai issued $10 million convertible loan notes which carry a coupon rate of 5% per annum. The loan notes are redeemable on 30 September 20X6 at par for cash or can be exchanged for equity shares. A similar loan note, without the conversion option, would have required Shanghai to pay an interest rate of 8%. (1) What is the amount that will be recognized as finance costs for the year ended 30 September 20X4. (2) What is the amount that should be shown under liabilities at 30 Sep 20X4. (3) How much would be recorded in equity in relation to the loan notes? Show your workings and round your answers to 2 decimals.
QUESTION 5 Meyer & Co. expects its EBIT to be $114,000 every year forever. The firm can borrow at 6 percent. The company currently has no debt, and its cost of equity is 12 percent. If the tax rate is 23 percent, what is the value of the firm? 1. $799,000.00 2. $389,000.00 O 3. $789,000.00 O4. $731,500.00
QUESTION 9 Kim PLC and Edith PLC are two Irish companies. Both companies can lend or borrow money at either fixed or floating rates. On 1st March Kim PLC needed to borrow €1,000,000 and it chose a fixed rate loan. On the same date Edith PLC had cash of C1,000,000 which it chose to put on deposit at a floating rate. Which of the following statements is most plausible: O Kim expects interest rates to fall but Edith expects interest rates to rise O Both companies expect interest rates to fall O Both companies expect interest rates to rise O Edith expects interest rates to fall but Kim expects interest rates to rise
QUESTION 9 If you invest $5100 per year in a stock that grows at rate of 6% per year, how much will your stock be worth after 12 years? QUESTION 10 If you have $47,000 in student loans at an interest rate of 5%, compounded monthly, what is the monthly payment necessary to pay them QUESTION 11 If the demand equation is D(x) = 109 - 3.9x and the supply equation is S(x) = 6.3x + 35, find the equilibrium quantity.
i will 10 upvotes urgent Suppose your firm is seeking an eight-year, amortizing $750,000 loan with annual payments and your bank is offering you the choice between a $795,000 loan with a $45,000 compensating balance and a $750,000 loan without a compensating balance. The interest rate on the $750,000 loan is 8.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it?(Do not round intermediate calculations and round your final answer to 2 decimal places.) Interest rate%
QUESTION 9 Suppose that the forward rate today for the period between 1 year and 2 years in the future is 7% (with annual compounding) and that sometime ago a company entered into an FRA where it will receive 5% (with annual compounding) and pay SOFR (market rate) on a principal of $100 million for the period. Today the 2-year zero rate rate is 6.5%% HINT. What is the valuo of the FRA this company has entered into to get paid 5%, now that the forward rates have gone from 5% to now being 7%? QUESTION 10 if the term structure of interest rates is upward-sloping which is higher (concave)? (a) The 5-year zero rate or (b) The forward rate corresponding to the period between 4.75 and 5 years in the future. What about for a term structure of interost rates that is downward-sloping? OA For downward sloping term structure the Forward Rate will be higher than the Zero Rate and for upward sloping the Zero Rate will be higher than the Forward Rate O B. Forward rates are independent of the Zero…
5.13 Bank A pays 10% interest compounded annually on deposits, while Bank B pays 9% compounded daily. a. Based on the EAR (or EFF%), which bank should you use? You would choose Bank A because its EAR is higher. You would choose Bank B because its EAR is higher. You would choose Bank A because its nominal interest rate is higher. You would choose Bank B because its nominal interest rate is higher. You are indifferent between the banks and your decision will be based upon which one offers you a gift for opening an account. -Select-IIIIIIIVVItem 1 b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest. If funds must be left on deposit until the end of the compounding period (1 year for Bank A and 1 day for Bank B), and you think there is a high probability that you will make…
QUESTION THREE A K100, 000 Treasury bill currently sells at 95% of its face value and is 65 days from maturity. Calculate the following for the Treasury bill: the discount yield. the investment yield.
nd Problem 9-4 (LG 9-5) Citigroup recently purchased $12.1 million worth of euro-denominated one-year CDs that pay 10 percent interest annually. The current spot rate of U.S. dollars for euros is $1.104/€1. a. Is Citigroup exposed to an appreciation or depreciation of the dollar relative to the euro? b. What will be the return on the one-year CD if the dollar appreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.004/€1? (Round your answer to 3 decimal places. (e.g.. 32.161)) c. What will be the return on the one-year CD if the dollar depreciates relative to the euro such that the spot rate of U.S. dollars for euros at the end of the year is $1.204/€1? (Round your answer to 3 decimal places. (e.g., 32.161)) 8. b. C. Exposure Return if dollar appreciates Return if dollar depreciates Appreciation ✔ 10.080 % 12.050 %
QUESTION 3 (a) KL Co. will be paying USD100,000.00 in 60 days. Assume the following interest rates: U.S. Malaysia 360-day borrowing rate 360-day deposit rate 7% 6% 5% 4% Assume the forward rate of the USD is RM4.20 and the spot rate of the USD is RM4.15. If KL Co. uses a money market hedge, how much will KL Co. be paying in 60 days?
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