Suppose that Woolworth needs to borrow AUD27 million in six months for a six-month period. To lockin the rate on this loan, Woolworth buys a "6 x 6 FRA on LIBOR at 16% p.a. from ANZ for a notional principal of AUD27 million. 6 x 6" means that ANZ has entered into a six-month forward contract on six-month LIBOR.Assume that in six months LIBOR6 is 21% p.a. How much will Woolworth receive from ANZ from this FRA contract? Assume that each month is 30 days. Select one a. AUD610860 b. AUD675000 c AUD625000 d. AUD1115702 e. AUD1954751

Suppose that Woolworth needs to borrow AUD27 million in six months for a six-month period. To lockin the rate on this loan, Woolworth buys a "6 x 6 FRA on LIBOR at 16% p.a. from ANZ for a notional principal of AUD27 million. 6 x 6" means that ANZ has entered into a six-month forward contract on six-month LIBOR.Assume that in six months LIBOR6 is 21% p.a. How much will Woolworth receive from ANZ from this FRA contract? Assume that each month is 30 days. Select one a. AUD610860 b. AUD675000 c AUD625000 d. AUD1115702 e. AUD1954751

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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Petrol Ibérico, Petrol Ibérico, a European gas company, is borrowing $700,000,000 via a syndicated eurocredit for six years at 80 basis points over LIBOR LIBOR for the loan will be reset every six months. The funds will be provided by a syndicate of eight leading investment bankers, which will charge up-front fees totaling 1.6% of the principal amount. What is the effective interest cost for the first year if the annual LIBOR is 4 40% during the first six months and 4.80% during the second six months The effective interest cost for the first year is (Round to two decimal places)
Suppose a bank makes a two-year $20,000 loan with the entire principal amount due in two years at an annual rate of 4.25%. The bank funds this with a six-month $20,000 CD at a cost of 1.75%. What is the bank's six month static GAP? O $20,000 O $10.000 O $0 O $10,000 O $20,000
1. AXN Sdn Bhd needs to raise RM1, 000,000 in short-term loan for five months. loan from OCBC bank at discounted interest rate of 12% per annum and a 20% compensating balance. The present account balance in the company is RM 100,000. Compute the effective cost of financing.
9. A company borrows 1,000,000 at an annual effective discount rate of 4%. The loan is to be repaid with n annual payments of 100,000 plus a drop payment one year after the nth payment. The first payment is due two years after the loan is taken out. Calculate the amount of the drop payment. A 87.072.14 B 90,700.14 C 94,479.31 D 98,415.95 E 99,999.99
15)
A company borrows US dollars at 5.1% for 183 days and then at maturity refinances the principal and interest at 5.3% for a further 92 days. What is the simple cost of borrowing over the 9 months?
Jérôme Kerviel Bank charges an APR of 11.80 per cent, compounded monthly, on its business loans. Société Générale charges a six per cent semiannual rate on similar loans. Which option is best from the borrower's point of view? A) Jérôme Kerviel Bank's loan is the best option because its EAR is 12.46 per cent. B) Société Générale's loan is the best option because its EAR is 12.36 per cent. C) Jérôme Kerviel Bank's loan is the best option because its monthly rate is 0.98 per cent, which is smaller than Société Générale's monthly rate at one per cent. D) Société Générale's loan is the best option because its EAR is 6.09 percent. E) Both options are identical from a borrower's perspective.
Cray Computing needs a 6-month loan for $300,000. Its bank quotes a simple interest rate of 11% on the loan. a.) What is the annual percentage rate (APR) if there is a compensating balance requirement of 30% of the loan amount? b.) What is the effective annual rate (EAR) if there is a compensating balance requirement of 30% of the loan amount?
7. A company must cancel a loan whose amount will have a value of $ 300,120.45 at the end of 6 years, if the company agrees to make semi-annual payments equal to 3.5% per annum effective. What will be the value of payment if you make the first one 18 months after the transaction? $ 27,742.78 8. What amount would have to be invested at the end of each year for the next 8 years, at 4% convertible? semiannually to have $ 5,000 at the end of the term. $ 541.87
Sheon Industry Producing of Italy borrows $ 16,000,000 at LIBOR plus a lending margin of 1.35 % per annum on a six month rollover basis from a UK bank. If six-month LIBOR is 5.6% over the first six-month interval and 5 1/4% over the second six-month interval, calculate how much Sheon Industry pay in interest over the first year of its Eurodollar loan.
A loan of £8,200 is to be repaid over a 11-year contract by three initial payments of £2,000, £2,000 and £4,000 at the end of years 2, 4 and 9, respectively. Hence, find a final amount £X at the end of year 11 that needs to be paid to fully clear the debt given that the lender charges an annual nominal rate of interest of 9.0% convertible monthly. ( correct answer = 8972.45, no tables, please, ONLY formulas)
An investment firm A pays 6.5% interest per annum, compounded on a quarterly basis. To remain competitive, the investment manager of another investment firm B Ltd is willing to match the interest rate offered by A, but interest will be compounded monthly. What nominal rate of interest must firm B offer to its clients?

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