The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 121 days, what are the bond equivalent and discount yields on this investment? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. Answer is complete but not entirely correct. Bond equivalent yield Discount yield 0.000% 0.000

The treasurer of a large corporation wants to invest $44 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.56 percent; that is, the EAR for this investment is 3.56 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 121 days, what are the bond equivalent and discount yields on this investment? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. Answer is complete but not entirely correct. Bond equivalent yield Discount yield 0.000% 0.000

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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A firm is evaluating a project which requires Rs.10 million in investments. The Firm's financial manager is proposing two options to finance the project. First, all equity financing; second, Rs. 5 million through 15% debentures are issued at par, and Rs. 5 million of ordinary equity. The managers expect three possible EBITS for this project, i.e., 1.5, 2, and 2.8 million. You have to determine when the manager would use the first and second financing options
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The treasurer of a large corporation wants to invest $23 million in excess short-term cash in a particular money market investment. The prospectus quotes the instrument at a true yield of 3.42 percent; that is, the EAR for this investment is 3.42 percent. However, the treasurer wants to know the money market yield on this instrument to make it comparable to the T-bills and CDs she has already bought. If the term of the instrument is 122 days, what are the bond equivalent and discount yields on this investment? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places. Bond equivalent yield Discount yield % %
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The Corporate Treasurer of LetsDoIt Ltd, a company based in Mexico plans to borrow MXN 500 million pesos in 3 months’ time for a period of 3 months at the base rate plus 50 basis points. A lot of speculation is going on regarding a potential change in the government and interest rates have since been quite volatile.The Corporate Treasurer had recently attended a professional workshop on interest rate risk management where he had learnt about interest rate collars and interest rate guarantees, among others. He has been requested by the Board of Directors to make a presentation on the two financial instruments. Elaborate on the main points that are expected to be included in the presentation.
A3)
Please help me answer this. Thank you.
AB Borda shall establish a risk-adjusted required rate of return as part of their investment analysis. The company has produced the following information: • The investment will be financed to 40% with bank loans and 60% with equity • The company's tax rate is 22% • The government bond for the intended investment period has an interest rate corresponding to 2% • The company has negotiated with the bank for a loan for the investment with an interest rate of 5%. • For the investment period, the company has an expectation that the index for the market portfolio will increase from the current 110 to 119.9 at the end of the investment period. • The company's intended investment has a covariance with a market portfolio of 120 and that the standard deviation for the market portfolio is 7.56. a) Calculate the company's nationally adjusted return requirement for the investment.
A bank offers a corporate client a choice between borrowing cash at 9% per annum and borrowing Bitcoin at -5% per annum. The risk-free interest rate is 3% per annum, and storage costs are 7% per annum. The interest rates on the two loans are expressed with annual compounding. The risk-free interest rate and storage costs are expressed with continuous compounding. Suppose that the price of Bitcoin is $58,000 and the corporate client wants to borrow $1,160,000. Discuss whether the rate of interest on the Bitcoin loan is too high or too low in relation to the rate of interest on the cash loan. What is the correct rate of interest for Bitcoin loan?
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