Hurt the profit margin

Assignment Help Finance Basics
Reference no: EM133121964

As a banker at one of the Islamic banks, you intend to provide a RM 100 million fixed-rate financing to a corporate client 90 days from now at a 10% profit rate. Your bank's cost of funds is the KLIBOR rate, and the following quotes are available

3-month KLIBOR spot = 6%

3-month KLIBOR futures = 93.00

A rise in KLIBOR spot could hurt the profit margin.

Now, If the interest rates go up by 150 basis points over the next 90 days, show the result of the hedge, i.e., profit or loss from futures, interest spread, interest earned, total earning, percentage earning, and percentage earning annualized.

Reference no: EM133121964

Questions Cloud

Prepare classified balance sheet in good form as at December : The following items were taken from the financial statements of J. Carla Vista Company on December 31, 2021. Prepare classified balance sheet in good form
Compute the total final tax that should have been withheld : Mr. Christopher Miranda earned the following prizes from two different competitions: Compute the total final tax that should have been withheld
Core body of knowledge : Question 1. The dividend-payout ratio in a firm is calculated by:
What the initial measurement of the note : The fair value of the land and the market value of the note is not determinable. What the initial measurement of the note
Hurt the profit margin : As a banker at one of the Islamic banks, you intend to provide a RM 100 million fixed-rate financing to a corporate client 90 days from now at a 10% profit rate
Find the 1-year forward rate : -The spot rates for 6 months, 1 year, and 2 years are ??^(0.5) = 8% , ??^(1) = 9%, and ??^(2) = 10% respectively;
Describe the appropriate accounting treatment under GAAP : You will be awarded $12 million, your attorney confidently asserts. Describe the appropriate accounting treatment under GAAP
How credit risk transferred through securitization : a. Explain how credit risk transferred through securitization. b. Critically discuss the principle that in an ABS all tranches have the same risk exposure.
Analysis in the capital budgeting process : What types of projects require the least detailed and the most detailed analysis in the capital budgeting process?

Reviews

Write a Review

Finance Basics Questions & Answers

  Differentiate a general obligation bond and a revenue bond

What is the difference between a Treasury bill, a Treasury note, a Treasury bond, and TIPS?

  Provide the web link for the video clip

What do you think is the main point of this video clip?- How might you change your use of credit cards as a result of watching this video clip?

  Fundamentals of financial accounting

Using the financial statements of Landry's Restaurants located in Appendix A of the text, Fundamentals of Financial Accounting 1st ed., by Phillips, Libby, and Libby, calculate the given ratios for 2002 and 2003:

  How many years would it take for brockman eps to triple

If that growth rate were maintained, how many years would it take for Brockman's EPS to triple?

  Expected capital appreciation

A stock currently sells for $50 per share has a 12% expected total return and a 7% expected capital appreciation. What is the expected dividend?

  What is the amount of the firms current assets

What is the amount of the firm's current assets? What is the amount of the firm's net income? What is the amount of the firm's total equity? What is the amount of the firm's long-term debt? What is the amount of the firm's total debt? What is the amo..

  What is the stock expected price-abc inc

The required rate of return on the stock is 13%. What is the stock's expected price 13 years from today (i.e., what is P13)?

  Read problem and find net present value

A project has an initial outlay of $4,098. It has a single payoff at the end of year 9 of $6,162. What is the net present value (NPV) of the project.

  Determine the current stock price

Suppose that a fifteen year, $1,000 face value bond pays interest of $37.50 every 3 months. If you require a nominal annual rate of return of 12%, with quarterly compounding,

  How each dividend would affect royal’s debt/equity ratio

Declare a 10 percent stock dividend. Royal Company would distribute one share of common stock for every 10 shares of common stock currently held. The company's common stock is currently selling for $50 per share.Royal Company is authorized to issu..

  Evaluate job offers-synergy through mergers and acquisitions

You've two job offers, one from a dominant-business firm and one from an unrelated diversified firm (suppose the beginning salaries are virtually identical). Which offer would they accept and why?

  Electronics is a midsized electronics manufacturer

MT 217 Electronics is a midsized electronics manufacturer located in Melbourne, Florida. The company president is Sherry Jones. When it was founded over 70 years ago, the company originally repaired radios and other household appliances. Over the ..

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!

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