User Account

All Pages

Explain how abc company can use an fra

Assignment Help Finance Basics
Reference no: EM132679314

ABC company has a $10 million loan maturing in 3 months that it plans to roll over for a further six months. The company treasurer feels that interest rates will be higher in three months when rolling over the loan. Suppose the current 6-month LIBOR rate is 1.9%.

a) Explain how ABC company can use an FRA at 2% from Banque Paribas to lock in a guaranteed six-month rate when it rolls over its loan in three months (e.g. buy/sell an FRA, underlying principle, what rate will apply and when).

b) In three months, 6-month LIBOR turned out to be 1.75%. How much will ABC company receive/pay on its FRA?

Reference no: EM132679314

Questions Cloud

What is the value of the asset for depreciation purposes : A project requires the purchase of new equipment at a cost of $18,000, What is the value of the asset for depreciation purposes?
Calculate the cost of equity using the dividend growth : Gabriel Industries stock has a beta of 1.44. The company just paid a dividend of $.94, and the dividends are expected to grow at 5.4 percent.
Sale of telecommunication equipment to regency : Maria Lilita is a chief financial officer of Mrident Group based in Unites States. She has just concluded for the sale of telecommunication equipment to Regency
Determine the amount of net income for August : Determine the amount of net income for August, assuming that no additional capital stock was issued, but dividends of $35,000 were paid during the month
Explain how abc company can use an fra : The company treasurer feels that interest rates will be higher in three months when rolling over the loan. Suppose the current 6-month LIBOR rate is 1.9%.
What is the net present value-acme corporation : Acme Corporation's dividends have been growing, and will continue to grow, at a constant rate, g. Three years ago, the dividend paid was = $4 and the most recen
Why might shareholders prefer the second payment plan : The board of directors of UT Wireless, Inc. is considering two compensation plans for the CEO of the company. The first would pay the CEO a salary of $300,000
What is the present value of project : The manager is considering a project. The project generates the cash flow $124 at t1. However, the cash flow at t2 decreases to $2. From t2 on, the cash flows
Prepare an income statement for the month ended October : Problem - Income statement - Universal Services was organized on October 1, 2012. Prepare an income statement for the month ended October

Reviews

Write a Review

Finance Basics Questions & Answers

  Prepare a multiple-step income statement

Assuming that 100,000 shares of common stock are outstanding, calculate the earnings per share before extraordinary items and the net earnings per share.

  Features of common stock and key features of preferred stock

Discuss the similarities and differences and Investors have an interest in gaining preferred stock--why is this

  Describe one such example of our use of earth analogs

Describe one such example of our use of Earth analogs to determine the circumstance elsewhere, and explain how it might influence our explorations in the future

  Adjusted price of the comparable property

A comparable property sold 15 months ago for $105,000. If the appropriate adjustment for market conditions is 0.25% per month (without compounding),

  You received an email from carl the operations manager from

you received an email from carl the operations manager from the california container division. they produce packaging

  What are the book and market values of the firm

He then formed a corporation and invested $400,000 in setting up a production plant. If the professor's belief is correct, what are the book and market values of the firm?

  Advantage of any global opportunities available to riordan

advantage of any global opportunities available to Riordan

  What is the estimation of the call alternative

What is the estimation of the call alternative if the danger free rate is 10 percent? Utilize the alternative proportionate strategy,What is the estimation of the call alternative if the danger free rate is 6 percent? Utilize the danger nonpartisan s..

  Is sports exports company a multinational corporation

1. Is Sports Exports Company a multinational corporation? 2. Why are the agency costs lower for Sports Exports Company than for most MNCs?

  What was the closing price for the given stock yesterday

Stock Quotations You found the following stock quote for DRK Enterprises, Inc. What was the closing price for this stock yesterday? Howmany round lots of stock were traded yesterday?

  What is the fw for a machine

What is the FW for a machine with the following details: APR (Nom / y) 10% per year compounded weekly; Initial cost ($325,000).

  Find the maximum loss

Assume you short-sell 100 shares of IBM, now selling at $178 per share. What happens to the maximum loss if you simultaneously place a stop purchase order at $192.50?

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