User Account

All Pages

Compute what rate would the bank offer a customer

Assignment Help Financial Accounting
Reference no: EM132721349

The Bank of Loans uses the following rating scheme to classify the riskiness of its customers.

Risk Class                            Risk Premium (%)

Prime                                .05

High grade                          1.0

Upper medium grade                 1.5

Lower medium grade                 2.0

Speculative: Non-investment grade 4.0

Speculative: Highly                     6.0

Substantial risks                       9.0

Extremely speculative         12.0

The bank's pure rate of interest is 4.0% and the inflation premium is 3%.

Problem 1: What rate would the bank offer a customer who is in the upper medium grade risk class?

A. 7.68%
B. 6.11%
C. 7.16%
D. 6.64%
E. 8.20%
F. 8.73%

Reference no: EM132721349

Questions Cloud

Antimicrobial resistance and natural selection : Here we explore the effects of the use of antimicrobial drugs which began during the World War II era. After more than 50 years of widespread use, many antimicr
Describe resources available to improve the problem : Describe financial/legal/ethical implications for the population related to the problem. Describe resources available to improve the problem.
Empowering organization to achieve its ultimate vision : Risk management is one of the most important components in empowering an organization to achieve its ultimate vision
Treatment modalities for frank : -Frank is being transferred to the ICU. If you were the ICU nurse, what would you have to consider in Frank's case?
Compute what rate would the bank offer a customer : Compute What rate would bank offer a customer who is in upper medium grade risk class? The bank's pure rate of interest is 4.0% and the inflation premium is 3%.
Describe a time spirituality was important in your life : Describe a time spirituality was important in your life or that of someone you love or cared for (e.g., family member, friend, patient). Why was it meaningful.
What is the amount of cash paid to bondholders for interest : Interest is payable semiannually each April 1 and October 1. What is the amount of cash paid to bondholders for interest during Year 1?
Develop strategies to protect itself from similar crimes : Should the company take actions or develop strategies to protect itself from similar crimes? What are your recommendations in this regard?
Compute how much of setup costsallocated to superior model : The company produces 4,000 units of the Superior model and 1,000 units. How much of the setup costs are allocated to the Superior model using ABC costing?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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