The cash market liabilities are included in the analysis

Assignment Help Financial Management

Reference no: EM131952896

1. A forward contract

has more credit risk than a futures contract.

is more standardized than a futures contract.

is marked to market more frequently than a futures contract.

has a shorter time to delivery than a futures contract.

is less risky than a futures contract.

2. A thrift has funded 10 percent fixed-rate assets with variable-rate liabilities at LIBOR + 2 (L + 2) percent. A bank has funded variable-rate assets with fixed-rate liabilities at 6 percent. The bank's variable-rate assets earn LIBOR + 1 (L + 1) percent. The thrift and the bank have reached agreement on an interest-rate swap with the fixed-rate swap payment at 6 percent and the variable-rate swap payment at LIBOR.

What will be the net after-swap cost of funds for the bank if the cash market liabilities are included in the analysis?

Variable-rate at LIBOR.

Fixed-rate at 8 percent.

Fixed-rate at 1 percent.

Fixed-rate at 2 percent.

None of the above.

Reference no: EM131952896

Questions Cloud

The opportunity to invest in project with uncertain outcome : On January 1, 20X1, Pujols Industries has the opportunity to invest in a project with an uncertain outcome.

Succession of forward contracts on interest rates : A swap that technically is a succession of forward contracts on interest rates is

Essentially series of forward contracts on interest rates : An interest rate swap is essentially a series of forward contracts on interest rates.

What is the end-of-year profit or loss of bank cash position : If in one year there is no change in either interest rates or exchange rates, what is the end-of-year profit or loss of your bank's cash position?

The cash market liabilities are included in the analysis : What will be the net after-swap cost of funds for the bank if the cash market liabilities are included in the analysis?

Credit forward is forward agreement : A credit forward is a forward agreement that. Which of the following shows the change in the value of a put option for each $1 change in the underlying bond?

Explain three methods of collecting primary-secondary data : Explore and explain three methods of collecting primary and secondary data and determine the advantages and disadvantages of each method.

Difference in spot-one-year-forward foreign-exchange rates : What was the approximate percent difference between the spot and one-year-forward foreign-exchange rates of these two countries

Identify the four categories of ratios : Identify the four categories of ratios used to evaluate health care organizations.

User Account

All Pages