What will be the net after-swap yield on assets for the bank

Assignment Help Finance Basics
Reference no: EM132509818

A company has funded 10 percent fixed-rate assets with variable-rate liabilities at LIBOR + 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 percent. The company 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. Briefly discuss your results.

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

b. What will be the net after-swap yield on assets for the bank?

Reference no: EM132509818

Questions Cloud

Assistance with humanities powerpoint : What are 2 examples of contemporary hunter-gatherer societies? How do hunters and gatherers view rights to land?
Discuss the meaning of money for larry : Discuss the work and none work stressors that Larry experience, and their consequences and Discuss the meaning of money for Larry.
Find the present value of the cash outflow : Pearson Limited acquires the net assets of Hardman Limited for a cash consideration of $80 000. Find the present value of the cash outflow
What is the forward one-year discount yield : What are the expected end-of-year profits or losses if the bank hedges its interest rate risk exposure using the swap?
What will be the net after-swap yield on assets for the bank : A company has funded 10 percent fixed-rate assets with variable-rate liabilities at LIBOR + 2 percent. A bank has funded variable-rate assets
What is the maximum amount of cost recovery : Assuming Cassie has a small net loss from her business prior to the deduction, what is the maximum amount of cost recovery Cassie can deduct
Prepare in good form a cash budget for march : Past collection history, Prepare in good form a cash budget for March. Markus Corporation's sales of gizmos are 10% for cash and 90% on credit.
Determining the exchange-traded fund : You currently hold U.S. stocks through an Exchange-Traded Fund, A.
How much should evans budget for direct labour for april : How many kilograms of plastic direct materials should Evans plan to buy during April? How much should Evans budget for direct labour for April?

Reviews

Write a Review

Finance Basics Questions & Answers

  Calculate the future value of the single cash flow

Calculate the future value of the single cash flow deposited today at the end of the deposit period if the interest is compounded annually at the rate specified

  At the end of last year roberts inc reported the following

at the end of last year roberts inc. reported the following income statement in millions of dollarssales 3000operating

  What is the balance in the account

a. What is the balance in the account after 4years? How much of this balance corresponds to"interest on interest"? b. What is the balance in the account after 28 years? How much of this balance corresponds to "interest on interest"?

  What is the company value

A company has an un-leveraged value of 3,000,000 and debt 300,000. If the company is subject to a corporate tax rate of 0.30, and investors

  Unit increase in productivity per hour

Chuck Sox makes wooden boxes in which to ship motorcycles. Chuck and his three employees invest a total of 40 hours per day making the 120 boxes.

  What is best strategy to move status quo to a desired state

According to the force field analysis model, what is the best strategy to move the status quo to a desired state

  What are the portfolio weights of each stock

An investor owns $6,000 of Adobe Systems stock, $7,000 of Dow Chemical, and $7,000 of Office Depot. What are the portfolio weights of each stock?

  Determine the total stockholders equity

Determine the total stockholders equity after recording these events, if no other transactions impacting the stockholders equity occurred - What is the total amount of dividend paid to shareholders in the current year?

  Cost reconciliation report under the fifo method

In the cost reconciliation report under the FIFO method, the costs to be accounted for equals the cost of beginning work in process inventory plus the cost of units transferred out.

  What is the holding period t

How does t change if the interest rate is 11 percent compounded annually?

  How could health services use expenditures

Several years ago, Health Services acquired a helicopter for use in emergency situations. Health Services incurred the following expenditures related.

  Calculation of ebit and sensitivity analysis

Calculation of EBIT and Sensitivity Analysis of The Can-Do Co. is analyzing a proposed 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!

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