What is the risk class of customer

Assignment Help Finance Basics
Reference no: EM133003077

The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers.

Risk Class/Risk Premium (%) Prime .05 High grade1.0 Upper medium grade1.5 Lower medium grade 2.0 Speculative: Non-investment grade 4.0 Speculative: Highly 6.0 Substantial risks 9.0 Extremely speculative12.0

The bank's pure rate of interest is 2% and the inflation premium is 3.5%.

The bank offers an annual rate of 7.68% to a customer. What is the risk class of this customer?

Reference no: EM133003077

Questions Cloud

Compound interest with nonannual periods : a. Calculate the future sum of $5,000, given that it will be held in the bank for 5 years at an annual interest rate of 6 percent
How present yield to maturity : Consider a 10-year bond with a 8% coupon that has a present yield to maturity of 7%. If interest rates remain constant, one year from now the price of this bond
What is the npv of the project-symon meats : Symon Meats is looking at a new sausage system with an installed cost of 475,000. This cost will be depreciated straight-line to zero over the projects five-yea
What is the total cost if lancer window corporation produces : What is the total cost if Lancer Window Corporation produces 600 doors? The production department at Lancer Window Corporation incurred
What is the risk class of customer : The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers.
Prepare a partial balance sheet to show the presentation : Prepare a partial balance sheet to show the presentation of the project as of December 31, 2021. Arrow Construction Company entered into three-year construction
Is it necessary to look at risks at all : Is it necessary to look at these risks at all? Why or why not? Explain
Discuss the condition under which exchange rate changes : Discuss the condition under which exchange rate changes may actually reduce the risk of foreign investment.
Commitments and securitization facilitate market : Explain how loan commitments and securitization facilitate market completeness. Why is this valuable in a return/risk context for the lender and the borrower (i

Reviews

Write a Review

Finance Basics Questions & Answers

  If interest rates remain unchanged what do you expect the

miller corporation has a premium bond making semiannual payments. the bond pays a coupon of 8 percent has a ytm of 6

  What are the uses of the eoq model

What are the uses of the EOQ model? What questionable assumptions are being made by the EOQ model?

  What is the stock price today

What is the stock price today if the required return is 10.3 percent?

  If a company is thinking about issuing preferred stock to

if a company is thinking about issuing preferred stock to raise capital what are some factors that it should consider?

  What is the predicted share price

Assuming no interest, what is the predicted share price according to the put-call parity relationship?

  Risk requires an expected return of in the range

Assume cash flows are $0. You thinkn an ivnestmetn with this much risk requires an expected return of in the range of 12%-14% per year. What is the NPV?

  Construct such a table and recalculate npv

What additional information would you need to construct a version of Table 6.7 that makes sense? Construct such a table and recalculate NPV. Make additional assumptions asnecessary.

  Describe the primary services a bank provides to a firm how

describe the primary services a bank provides to a firm. how is the bank compensated for these

  What is wacc-caspian sea drinks

Caspian Sea Drinks' is financed with 68.00% equity and the remainder in debt. They have 10.00-year, semi-annual pay, 5.85% coupon bonds

  Describe the observation that suggested to scientists

In what way does the chromosome theory of inheritance require a revision to mendel's law of independent assortment

  What is the impact of student loans

1. Give a brief overview of the student debt in Canada with some statistics and relevant data

  The state lotterys million dollar payout provides for 14

the state lotterys million dollar payout provides for 1.4 million to be paid in 25 installments of 56000 per payment.

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