Q: Company A agrees to enter into an FRA agreement with Company B in which Company A borrows $…
A: Given information : Borrowing amount = $50,000,000 6 month interest rate = 0.75% 9 month interest…
Q: What is the interest rate that both companies agreed upon? Suppose that at the expiry date of the…
A:
Q: On January 1, 2021, JPS Industries borrowed $220,000 from Austin Bank by issuing with interest…
A: Requirement 1 June 30 Receive floating interest ($220,000×3%×½) = $3,300 Pay fixed interest…
Q: Company Z enters into a 5-year interest rate swap contract on 1 January 2015 as the fixed-rate payer…
A: Swap Contracts: A swap contract is a financial instrument that two parties use to switch or…
Q: Annual payments of 8,000 for 12 years that will start 2 years from now. b. Quarterly payments of…
A: Delayed annuities are called deferred annuity. For deferred annuities cashflows will not happen…
Q: A firm sells the same material with two separate payment plans. 1. According to the 1st payment…
A: Total present value of sale = Present value of monthly payment + Present value of interim payment…
Q: An IOU agreement was made between two persons. For a face value of P100,000, it was agreed that the…
A: A bond is an instrument that obligates the issuer to pay the buyer pre-determined interest. The…
Q: A 20-year loan of 20, 000 may be repaid under the following two methods: i. amortization method with…
A: given that: Loan Amount=20000 Loan period= 20 years The excel formula is:
Q: Ayola has bought from YoBank a 3 versus 6 Forward Rate Agreement which is based on a notional…
A: Forward rate agreement: It refers to an interest rate hedging strategy where parties agree to settle…
Q: Alolo has bought from YoBank a 3 versus 6 Forward Rate Agreement which is based on a notional…
A: Forward rate agreement: It refers to an interest rate hedging strategy where parties agree to settle…
Q: Company Z enters into a 5-year interest rate swap contract on 1 January 2015 as the fixed-rate payer…
A: A Swap: When one party having a fixed interest liability exchanges this cash flow with another party…
Q: Company A agrees to enter into an FRA agreement with Company B in which Company A borrows $…
A: Given, Borrowing Amount = $40,000,000 6 month interest rate @0.77% 9-month interest rate@0.89%
Q: An IOU agreement was made between two persons. For a face value of $100,000, it was agreed that the…
A: Face value = $100000 Annual payment (A) = 10.50% of Face value = $10500 Redemption value (R) = 90%…
Q: A person owes $ 1,000.00 due in 1 year at 14% interest. You want to settle this obligation through…
A: GIVEN, FV = $1000 R=14% N = 3 AND 9 YEAR LET AMOUNT = A
Q: A contract calls for semiannual payments of P40,000 for the the next 10 years and an additional…
A: Present value is the current value of the future cash flows at given specified rate. It means what…
Q: Morton Company obtains a one-year loan of 3,000,000 Japanese yen at an interest rate of 7%. At the…
A: The effective financing rate of borrowing in foreign currency is determined using the interest rate…
Q: Tam's Pizza, Inc. charges an initial franchise fee of P50,000 for the right to operate as a…
A: From the perspective of the Franchisor to earn the amount of revenue from the franchise contract…
Q: Pharoah Tooling Ltd. is assessing two available options for the purchase of new equipment with a…
A: Purchase Amount (negotiated) of New Equipment = $130,000. Downpayment Amount =$130,000 × 20%=$26,000…
Q: An investor who owns a interest rate swap pay six-month LIBOR and receive 2.38% (semi-annual…
A: Here, Notional Principal is 99 million Euro Receive six month LIBOR of 2.38% with semi annual…
Q: A 10-year loan of 2000 is to be repaid with payments at the end of each year. It can be repaid under…
A: Loan Amount, A=2000Yearly Payment, P=200Number of years=10Interest rate=5%Total amount paid in case…
Q: A payment of $2,500 is due in 2 years and $3,500 is due in 4 years. These two original payments are…
A: Discounting is a technique to compute the present value (PV) of future cashflows by using an…
Q: year, ₱1,000,000 variable-rate loan with interest payments due at each year-end and the principal…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: On March 31, 20x1, TRUST CO. (customer)enters into a 4 -year lease of equipment with FAITH CO. (…
A: A lease can be defined as a legal contract between two parties where one party agrees to rent its…
Q: On January 1, 20x1, ABC Co. obtained a five-year, ₱1,000,000 variable-rate loan with interest…
A: Interest rate swaps are a kind of derivative contract wherein the parties involved in the forward…
Q: A Government of Canoda bond will pay $300 at the end of every six months for the next14 years, and…
A: A bond is a debt instrument that is used to raise capital. It can also be traded on the secondary…
Q: Chango Industries has decided to borrow $50,000,000.00 for six months. To reduce the company’s…
A: Interest rate swap Under Interest rate swap, one party pays fixed interest rate while another party…
Q: What is the interest rate that both companies agreed upon? (ii). Suppose that at…
A: (i) Interest rate at which both the countries agrees is the interest on trade date that is 0.89% per…
Q: CPLF borrows P2,500,000 from Bank DAAE at 11% interest to be paid at the end of each year for 15…
A: A term loan is a type of credit vehicle in which an amount is lent to another party in exchange for…
Q: Calculate the FRA payout for a long position.
A: Information provided: Notional amount = $20 Million FRA rate = 4.75% Settlement date is after 37…
Q: Assume that a one-year CD purchased for $1000 pays an APR of 6% that is compounded semi-annually.…
A: Here, Value of CD is $1,000 Time Duration is one year Interest Rate is 6% Compounding period is…
Q: Pharoah Tooling Ltd. is assessing two available options for the purchase of new equipment with a…
A: The interest amount is the amount that is paid with the principal while taking the loan from a bank…
Q: the interest rate is 10% and compounding is semiannual, what series of equal annual ansactions is…
A: The series of annual equal payment that are equivalent to the present value of cash flow of series…
Q: A contract calls for semi-annual payments of P40,000 for the next 10 years and an additional payment…
A: Equivalent cash value = present value of semi-annual payments of 40,000 + present value of 250,000
Q: Francisco Gómez today contracts a debt of $ 210,500 at 21% convertible semi-annually that he will…
A: Debt amount (PV) = $ 210,500 Interest rate = 21% Semi annual interest rate (r) = 21%/2 = 10.50%…
Q: Two years ago, the rental for the use of equipment and facilities as paid 5 years in advance, with…
A: Lease includes: Capital lease Operating lease Specialized Service Lease Sale and leaseback Cross…
Q: Determine the period of deferral of the following conditions. a. Annual payments of 8,000 for 12…
A: At times annuity may be deferred ie: the payments are made after a certain period of time and not…
Q: Anna entered into a four-year interest rate swap three years ago. The notional amount of the swap…
A: Amount of Swap = 200,000 Variable rate = 245 basis or 2.45% Annual interest rate = 7.35% Net swap…
Q: A payment of $2,350 is due in 2 years and $3,400 is due in 4 years. These two original payments are…
A: While rescheduling the payments, the present value of original payment plan should be equal to…
Q: A loan was to be amortized by a group of four end-of- year payments forming an ascending arithmetic…
A: Loan is been paid in the ascending arithmetic progression Year Loan Repayment 1 5000 2 5400…
Q: , A firm sells the same material with two separate payment plans. 1. According to the 1st payment…
A: Total present value of sale = Present value of monthly payment + Present value of interim payment…
Q: A contract has been signed to lease a building at P21.483 per year with an annual increase of P1,045…
A: Given: Lease = P21,483 Annual increase = P1,045 Years = 10 Interest rate (Rate)= 8.78%
Q: On March 2021, Company A enters a forward rate agreement(FRA) with company B to borrow $1 million at…
A: The Forward rate agreement is a contract that refers to the agreement between two parties that helps…
Q: Woland National Bank purchases a three-year interest rate cap for a fee of 2 percent of notional…
A: LIBOR refers to the London Interbank Offered Rate. It is the interest rate at which the banks lend…
Q: On April 1, 2021, John Vaughn purchased appliances from the Acme Appliance Company for $1,000. In…
A: Purchased Amount = $1,000 Time Period = 18 Months Annual Interest Rate = 24%
Q: On March 31, 20x1, TRUST CO. (customer)enters into a 4 -year lease of equipment with FAITH CO. (…
A: A lease is a kind of renting the property. The user of the property also known as the lessee will…
Q: Suppose that a party wanted to enter an FRA that expires in 121 days and is based on 56-day LIBOR.…
A: Given information: Notional amount : USD10,000,000 Rate quoted by dealer : 3.3% Rate at expiration:…
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Alolo has bought from BolBank a 3 versus 6 Forward Rate Agreement which is based on a notional principal amount of USD 5 million and an agreed rate of 2% per annum. At the start of the FRA period, the actual rate of interest is 1.5% per annum.
Explain what will take place at the start of the Forward Rate Agreement
period and calculate the reimbursable amount, assuming a 360-day year.
Step by step
Solved in 3 steps
- Alolo has bought from YoBank a 3 versus 6 Forward Rate Agreement which is based on a notional principal amount of USD 5 million and an agreed rate of 2% per annum. At the start of the FRA period, the actual rate of interest is 1.5% per annum. Explain what will take place at the start of the Forward Rate Agreementperiod and calculate the reimbursable amount, assuming a 360-day year.A contract requires payments of $4954.00 today, $4004.00 in 3 years, and S 2583.00 in 5 years. When can the contract be fulfilled by a single payment equal to the sum of the required payments if money is worth 7% p.a. compounded semi - annually? State your answer in years and months (from 0 to 11 months).Use the following information for the next two questions:On January 1, 20x1, ABC Co. obtained a five-year, ₱1,000,000 variable-rate loan with interest paymentsdue at each year-end and the principal due on December 31, 20x5.As protection from possible fluctuations in current market rates, ABC Co. enters into an interest rateswap for the whole principal of the loan. Under the agreement, ABC Co. shall receive variable interestand pay fixed interest based on a fixed rate of 8%. Swap payments shall be made at each year-end.The following are the current market rates: Jan. 1, 20x1 8% Jan. 1, 20x2 9% Jan. 1, 20x3 12% 62. How much is the fair value of the interest rate swap on December 31, 20x1? (Indicate whether it is aderivative asset or liability.)a. 32,397 assetb. 32,397 liabilityc. 46,884 assetd. 53,223 liability63. How much is the fair value of the interest rate swap on December 31, 20x2? (Indicate whether it is aderivative asset or liability.)a. 83,294 assetb. 83,294…
- A loan of R5000 is to be amortised over thirteen years by regular equal quarterly payments starting three months after the loan is granted. Interest on the loan is charged at 12,8% p.a compounded quarterly. Immediately after the fourth payment, the interest rate changes to 13% p.a. compounded quarterly. If the payments remain unchanged from the fifth payment onwards, then the new final amount ( to the nearest cent) needed to amortise the loan in the original time period, is equal to Rsamson entered into an agreement with delilah bank whereby the latter shall pay the former double the amount after a period of n years. a.) if the agreed interest rate is 14% compounded yearly, how much is the accurate value of n1? b.) if the parties agreed to use of an approximate rule, how much is the value of n2?An investor who owns a interest rate swap pay six-month LIBOR and receive 18.1% (semi-annual compounding) on a principal of 95 million Euro. The remaining life of this swap is 15 months (1.25 years). The LIBOR rates for 3m, 9m and 15m are 19.1%, 19.6%, and 20.1% (continuous compounding), and the 6-month LIBOR on the last payment date (the most recent reset date) was 19.3% (semi-annual compounding). Calculate the value of the swap (in millions):
- A contract requires payments of $4610.00 today, $5440.00 in 2 years, and $4438.00 in 5 years. When can the contract be fulfilled by a single payment equal to the sum of the required payments if money is worth 7% p.a. compounded semi-annually? State your answer in years and months (from 0 to 11 months). The contract can be fulfilled in year(s) and 40001 month(s).A contract calls for semiannual payments of P40,000 for the the next 10 years and an additional payment of P250,000 at the end of that time. Find the equivalent cash value of the contract at 7% compounded semiannually P598,589.00 O P752,777.00 P694,138.00 P444,526.25An IOU agreement was made between two persons. For a face value of P100,000, it was agreed that the borrowerwill make 8 annual payments at a 10.50% interest rate. The first payment will be due at the end of the year. It wasalso agreed that 90% of the face value will be paid for redemption. What is the bond value if it yields at a rate of12%?
- Company A agrees to enter into an FRA agreement with Company B in which Company A borrows $ 50,000,000 in 6-month time for a period of 9 months, and Company B invests $ 50,000,000 in 6-month time for a period of 9 months. The 6-month interest rate is 0.75% per annum and the 9-month interest rate is 0.90% per annum. (i).What is the interest rate that both companies agreed upon? (ii).Suppose that at the expiry date of the FRA, the 6-month interest rate is 0.81% per annum and the 9-month interest rate is 0.96% per annum, calculate the compensatory payment and which party receives it?You enter into a five-to-eight-month forward rate agreement with a firm. You agree to lend the firm a 3-month loan of $5 million starting 5 months from now, with a quarterly compounded forward interest rate of 2.5% per annum. Currently, the continuously compounded 5-month and 8-month interest rates are 3% per annum and 3.5% per annum, respectively. 1) What is the implied forward rate for the 3-month period starting 5 months from now? 2) What is the present value of this forward rate agreement to you now?This questi Consider a loan of $7700 at 6.8% compounded semiannually, with 18 semiannual payments. Find the following. (a) the payment necessary to amortize the loan (b) the total payments and the total amount of interest paid based on the calculated semiannual payments (c) the total payments and total amount of interest paid based upon an amortization table. (a) The semiannual payment needed to amortize this loan is $ 545.94. (Round to the nearest cent as needed.) (b) The total amount of the payments is $ 9827.07 (Round to the nearest cent as needed.) The total amount of interest paid is $ 2127.07 (Round to the nearest cent as needed.) (c) The total payment for this loan from the amortization table is $ (Round to the nearest cent as needed.) The total interest from the amortization table is $ (Round to the nearest cent as needed.)