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!
Swap-Linked Notes:
Interest rate swaps are derivative products which help in transforming the cash flows of existing debt issues. These are not only useful in covering the existing exposure but also in the new issue market. For instance, consider a company X willing to raise $20 million by issuing a fixed rate note with semi-annual coupon payments over a 3-year period. The company already has some fixed rate exposure and is not in a position for another exposure. A large institutional investor is willing to accept the credit risk of X on a privately placed loan provided that the deal can be structured as per its terms and conditions. As the fund manager of this investment company anticipates a decline in interest rates, he/she would like to design the loan contract based on his/her perception. Hence he/she links the semi-annual coupon on the note inversely with the level of some variable interest rate index such as LIBOR. As the coupon rate increases when the general level of interest rates decreases and vice versa, this is termed as reverse-floating rate contract. Let us take the following illustration to understand the swap-linked note.
Assume that company X and the investor agree to reset the coupon semi-annually at a level equal to 10% minus LIBOR. If 6-month LIBOR is 6%, then the coupon will be (10% - 6%) = 4%. If LIBOR is 3%, then the coupon will be (10% - 3%) = 7%. Thus the investor gains from falling rates and is subject to less credit risk than what would have been if a regular bond issue had an embedded derivative. A reverse floater will benefit more from a rate decline than that could be obtained from a fixed rate note of identical maturity.
Discount Rate Determinants The discount rate is the firm weighted average cost of capital. It represents the opportunity cost of investing creditors and shareholders funds in o
FINANCIAL MANAGEMENT
Q. What is Disadvantages of IRR Method ? Disadvantages of IRR Method:- (i) Computation of IRR involves tedious calculations. (ii) Occasionally this method produces more t
help me withh the calculation concept of the point where the firm is indifferent
Current Assets:- Stock of Raw-Materials :- [(Cost of yearly consumption Of raw material)*{ (Average Inventory holding period (weeks/months))}/(52 weeks / 12 months)]=
DISCUSS THE APPLICABILITY OF OPERATING CYCLE IN VEGETABLE GROWING.
You are an investment banker advising a Eurobank with reference to a new international bond offering it is considering. The carries on are to be employed to fund Eurodollar loans
QUESTION 1 (a) What do you understand by the term Civil Society Organisations? (b) Distinguish between sectional and promotional groups. Give examples to support your answer
caselets of bajaj electronics
Q. What are the Motives of Holding Cash? Motives of Holding Cash: - In every business assets are kept for the reason that they generate profit. But cash is an asset which doesn
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: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd