User Account

All Pages

Calculate compensation amount on settlement date

Assignment Help Finance Basics
Reference no: EM133056393

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 unfavourable. 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.

Reference no: EM133056393

Questions Cloud

Will the operating income increase or decrease : The Cinnamon product line is rented for $11,000 per year, will the operating income increase or decrease and by how much? Show your calculations
Determining the balance of the loan : What was the balance of the loan on December 1, before the monthly payment? Assume that the interest rate remained at 6.75% for the life of the loan.
Does spatial access privilege some and marginalize others : Labor and Construction-Which people built it, and from what position in the power hierarchy and How have natural materials and passive techniques benefitted
What is green bond : 1. How does the nature of a business affect its sources of financing? (consider the risk of business, different industries, give some examples)
Calculate compensation amount on settlement date : You are concerned that the changes in interest rates will be unfavourable. You approach an FRA dealer, who provides the following forward quotations:
Determine work-in-process inventory on July : Test Company reported direct materials used of $100,000 and cost of goods manufactured $240,000 for July. Determine work-in-process inventory on July 31
Explain the three basic types of swaps : Company AA and company BB each need $1 million in funds and are quoted the following rates in the fixed and floating markets.
What is the year-end balance in Fargo Corporations : During 2021, Concord Corporation reported Net Income of $100,000 on November 15, 2021. What is the year-end balance in Fargo Corporations
Determining the market feedback hypothesis : Briefly explain why initial public offerings are underpriced according to the market feedback hypothesis. (Give a brief answer that does not exceed 50 words)

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd