User Account

All Pages

How interest-rate futures might be used to limit exposure

Assignment Help Finance Basics
Reference no: EM131749983

Question: You are the senior manager of a chartered bank and have been approached by one of the bank's important clients. The client is seeking advice on how to handle an unwanted interest-rate exposure attributable to a major capital expenditure commitment that is about to be finalized. Specifically, major equipment is to be installed with payment of $15 ,000,000 due in 6 months. All $15,000,000 is to be raised at that time through 20-year debt. The current interest rate on such debt is 12 percent, but the client believes that interest rates could increase by 2 percentage points within the next 6 months. The client has asked you to illustrate numerically how interest-rate futures might be used to limit exposure. It was agreed that the explanatory numerical illustration could ignore taxes and transaction costs.

Reference no: EM131749983

Questions Cloud

What is data privacy : What is data privacy? What is the legal framework supporting health information privacy?
Calculate the equivalent units of production for the month : Calculate the equivalent units of production for the month, assuming the company uses the weighted average method
Why change is being implemented or should : Should managers and leaders fully explain why change is being implemented or should they be communicated how the change will help the organization?
Write a report on the critical evaluation of ten websites : You are required to write a report on the critical evaluation of 10 Websites in 5 given groups (types of e-commerce) for a business manager.
How interest-rate futures might be used to limit exposure : You are the senior manager of a chartered bank and have been approached by one of the bank's important clients. The client is seeking advice on how to handle.
How your company would use your plan to continually grow : How your company would use your plan to continually grow and market your venture. In the summary, evaluate the plan for its short- and long-term feasibility.
Background influence your approach to leadership : Does your cultural background influence your approach to leadership? If so, how? If not, explain why you believe this.
Explain utilities expense and supplies expense : Delivery Expense; Advertising Expense; Utilities Expense; Supplies Expense
What we know and what questions need more attention : In the article titled "Effective leadership behavior: What we know and what questions need more attention", Yukl discussed many elements of effective leadership

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