Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Of course a swaption will be needed. The major reasons being that Bond A is callable after 3 years and matures in 4 years whereas Bond B matures in 5 years. It is understandable that if interest rates decrease substantially Bond A will be called.
2. First let's glance at the required structure to convert Bond A in to Bond B
(a) To eradicate the credit risk involved in Bond A we need to buy a CDS with 4 year maturity. That will alter the credit of the initial portfolio from AA- to AAA.
(b) Second step involves the conversion of fixed rate in to floating rate. For this we require a (fixed payer) interest rate swap in USD with maturity 5 years.
(c) By utilizing a cross currency swap (floating to floating) we exchange USD floating into DEM floating. Therefore we need a currency swap for 5 years.
(d) Ultimately we need to hedge the risk mentioned in part (c). Consequently we should buy a (Bermudan type) swaption in USD.
The ability of a firm to satisfy its debt obligations can be assessed using three sets of ratios: Short-term solvency ratios Capitalization
Q. Show the Accounting Profit Criteria? Accounting Profit Criteria: - Under accounting profit criteria there is merely one method for making capital expenditure decisions. This
Financial Reports: Each person has their own perception on what a particular financial report should contain, and invariably in what they consider to be the important factors w
Bonds are usually recognized by yields, which change from time to time owing to many market forces. There exists an inverse relationship between the bond price and the
Sensitivity analysis A sensitivity analysis studies the impact of specified variations in key factors on the initially-calculated NPV. The initial point for a sensitivity analy
Q. Degree of uncertainty in predicting cash balances? Probability approaches identify a degree of uncertainty in predicting cash balances and allow for a range of outcomes to
What is GATT, and what is its goal? GATT is the General Agreement on Tariffs and Trade it is a agreement that seeks to decrease trade barriers among participant nations.
A proposal to extend the ABC Gas Company Ltd's gas distribution network to the NOIDA industrial cluster, about 40 km east of Delhi, at distance of about 20 kms from the ABC's exist
Q. Determine Earnings per share? Current earnings per share = 100 × (4550 - 225)/ 5000 = 86.5 cents Earnings per share after one year = 100 × (4508 - 225)/ 5000 = 85.7 cents
The consolidated income statement for AB Group for the year ended 30 June 2010: (all amounts in the workings are in $000, unless stated otherwise)
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd