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a) Black Corp. currently has $65 million worth of floating rate debts carried at an average rate of LIBOR + 2.6% that it would like to hedge against rising interest rates without having to issue fixed rate bonds. Accordingly, they have approached Red Corp. (a swap dealer) about an 8-year interest rate swap with a notional value of $65 million. If Black can borrow in the fixed rate market at 5.15% and the swap rate is currently 2.35%, how much money will it be able to save from this arrangement each year (compared to simply issuing fixed rate bonds)?
b) What net payment is made to Black for a six month period in which LIBOR is 2.6%?
c) Briefly explain why banks do not require margin when they sell forward contracts
d) Briefly explain how Sojitz Corp. is attempting to naturally hedge its exposure to supply disruptions of rare earth elements (REEs)
mystore retail has about $200 000 in credit sales each month.mystore factors all these invoices at a 5% fee.what is the effective annual (%) cost of this action?
Profit for the year R3 million R4 million Gross dividends R1.5 million R2 million Market value per ordinary share R4 R1.60 Number of ordinary shares 5
Question: a) The new capital management framework provides an upgrade of the old version in terms of new risk management techniques. What is the scope of application for the n
discuss in detail various sources ffom wherebabks can borrow funds within India
calculate pv
Solution of the Black-Scholes model is obtained through a transformation into a heat equation. The general one-dimensional heat equation is given by where α > 0 is a consta
Table gives the average MAPE for all SKUs with positive preview demand together (overall) and also per preview demand class. Furthermore, the error percentages in bold were signi?c
#questioCost of equity and corporate taxesn..
problem 1 (a) (i) Define Corporate Governance. (ii) Show the ethical implications behind Corporate Governance. (b) (i) Why do organizations engage in social accounting?
Many ERP vendors have developed strategies to make their software available to small to medium enterprises (SME's). These strategies have focused around pre-configured solutions, i
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