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LIBOR zero rates are flat at 5% in the United States and flat at 10% in Australia (both annually compounded). In a 4-year swap Australian LIBOR is received and 9% is paid with both being applied to a USD principal of $10 million.
Payments are exchanged annually. The volatility of all 1-year forward rates in Australia is estimated to be 25%, the volatility of the forward USD/AUD exchange rate (AUD per USD) is 15% for all maturities, and the correlation between the two is 0.3. What is the value of the swap?
The market price of risk for the car price is estimated to be - 0:1. What is the value of the option? Assume that the risk-free rate for all maturities is 6%.
What happens to the standard deviation when the short rate increases to 8% in Vasicek's model; Rendleman and Bartter's model; and the Cox, Ingersoll, and Ross model?
explain the variation in a particular dependent variable. The regression output for each equation can be summarized as follows:
If VersaLife Corporation issues new debt, then the bond market expects a yield of 7.5%. Preferred stock is trading for $96, has a $100 par value and pays an annual dividend of 8% (the next dividend is due in one year).
A firm has zero debt in its capital structure. Its overall cost of capital is 10%. The firm is considering a new capital structure with 80% debt. The interest rate on the debt would be 8%.
What is the value of a European swap option that gives the holder the right to enter into a 3-year annual-pay swap in 4 years where a fixed rate of 5% is paid and LIBOR is received?
Suppose you sell a fixed asset for $121,000 when its book value is $141,000. If your company's marginal tax rate is 39 percent, what will be the effect on cash flows of this sale
North Sea Oil has compiled the following data relative to current costs of it basic sources of external capital- long term debt, preferred stock, and common stock equity- for variant ranges of financing.
A company is considering a project with a life of 3 years. The initial investment is $15,000 with annual cash inflows of $7,000. Assume the Cost of Capital is 10%.
On Sept 15th, 2013, the Dow Jones Industrial Average closed at $14,776.13, which was down from $14,946.46 the day before. What was the return (in percent) of the stock market that day
Sony Corp. packed a shipment of videocassette tapes into a 40-foot ocean container for transport to England. Sony put the tapes into 1,320 cardboard cartons, then strapped the cartons onto fifty two wooden pallets.
Argue for or against an established theory involving Mergers and Acquisitions or Financial Ratio Analysis and argue for or against your own theory involving Mergers and Acquisitions or Financial Ratio Analysis
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