User Account

All Pages

Design a swap that will net a bank acting as intermediary

Assignment Help Financial Accounting
Reference no: EM132602449

Companies A and B have been offered the following rates per annum on a 50 million five-year loan:

Fixed rate of company A 11.0%

Floating rate of company A TB + 1.1%

Fixed rate of company B 12.4%

Floating rate of company B TB + 1.6%

Company A requires a floating loan and company B requires a fixed rate loan.

Required;

Question i. Design a swap that will net a bank acting as intermediary 0.1% per annum and that will appear equally attractive to both companies.

Question ii. Assume that the financial intermediary adjusted his charge to 30 basis points. Would it be still tenable to pursue the swap? If so give the appropriate diagram for the swap showing how it will be designed.

Reference no: EM132602449

Questions Cloud

Compute the irr for project : Net returns are estimated to be $64,000 per year for 10 years. Compute the IRR for this project.
What will be the value of the asi stock : What will be the value of the ASI stock at the end of year 4 (i.e. P4)?
How long will kevin have to make monthly payments : If the payments are due at the end of each month and the payments are deferred for four years, for how long will Kevin have to make monthly payments?
What is the amount of interest? paid : A demand loan for ?$10,084.95 with interest at 9.5?% compounded semi-annually is repaid after 5 ?years, 5 months. What is the amount of interest? paid?
Design a swap that will net a bank acting as intermediary : Design a swap that will net a bank acting as intermediary 0.1% per annum and that will appear equally attractive to both companies.
What is the price of province of manitoba treasury : What is the price of a 91?-day, $25,000.00 Province of Manitoba treasury bill that yields 2.47% per? annum?
Understand the statement of cash flows : Your friend, Diana Wood, recently completed the second year of her business and just received annual financial statements from her accountant
What rates of interest will A and B end up paying : If the swap is to appear equally attractive to A and B, what rates of interest will A and B end up paying? Draw a diagram showing how the swap will be designed.
What is the pv of financial distress costs the firm : Suppose the firm announces plans to increase its leverage by borrowing $100 million and repurchasing shares.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare monthly schedule of budgeted operating cash receipts

Prepare a monthly schedule of budgeted operating cash receipts for July, August, and September - Prepare a monthly purchases budget and a schedule of budgeted

  Prepare entry to record the remittance of the sales taxes

Prepare the entry to record the remittance of the sales taxes on October 5 if a 2% discount is allowed for payments received by the State Revenue Department by October 10.

  Equity method to account for investment in seri

Separate incomes for Poe and Seri for 2013 are $35,000 and $120,000, respectively. Poe uses the equity method to account for investment in Seri.

  What kind of revenue will you earn when will you record it

part a-a. what is the interest expense for 2013 b. how much equipment was purchased during the year? c. what was the

  Maximum amount that bg corporation should be willing to pay

What is the maximum amount that BG Corporation should be willing to pay to take over SMCorporation (rounded to the nearest thousand dollars)?

  Developed schedule of future taxable and deductible amounts

Nadal Inc. has two temporary differences at the end of 2006. The first difference stems from installment sales, and the second one results from the accrual of a loss contingency. Nadal's accounting department has developed a schedule of future taxabl..

  Calculate the amount of sales revenue reported

The following selected account balances were taken from Buckeye Company's general ledger at. Calculate the amount of sales revenue reported in Buckeye Company's 2005 income statement.

  Discuss how different stakeholder personnel inside aca

Discuss in detail how different stakeholder personnel inside ACA Restaurant Café'may be able to contribute to a Master budget.

  Corporate tax return problem

Complete Blue Catering Service Inc.'s (BCS) 2014 Form 1120, Schedule D, and Schedule G (if applicable) using the information provided

  Calculate the profitability index for this project

You have a project with the following cash flow stream (assume a 10% discount rate).  What is the profitability index of the project?  Is it acceptable? Calculate the profitability index for this project. Is the project favorable?  Why or why not?

  Transaction debit credit balance

Number Date Description of Transaction Debit Credit Balance

  Determine stock investment transactions

Determine Stock Investment Transactions. Prepare the journal entries for the original purchase, the dividend, and the sale under the cost method.

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