24. Rockstar Financial is renegotiating a $7 million dollar loan with Amazon, It ischarging an upfront fee of 30 basis points, servicing fee of 10 basis points, and anterest rate of 7.5%. If the percentage change in the credit risk for Amazon is 3.2%,chen what should the duration be on the loan to make this acceptable for bothRockstar Financial and amazon if the cost of funds for Rockstar Financial is 5.5%?A) 44.89 yearsO B) 20 yearsC) 13.64 yearsD) 34.1 yearsE) 10.6 years

Loan means the amount borrowed by an individual or a business firm for purchasing personal assets or…

- Rockstar Financial is renegotiating a $7 million dollar loan with Amazon, It is arging an upfront fee of 30 basis points, servicing fee of 10 basis points, and a erest rate of 7.5%. If the percentage change in the credit risk for Amazon is 3.2%, en what should the duration be on the loan to make this acceptable for both ckstar Financial and amazon if the cost of funds for Rockstar Financial is 5.5%? DA) 44.89 years B) 20 years C) 13.64 years D) 34.1 years E) 10.6 years

- Rockstar Financial is renegotiating a $7 million dollar loan with Amazon, It is arging an upfront fee of 30 basis points, servicing fee of 10 basis points, and a erest rate of 7.5%. If the percentage change in the credit risk for Amazon is 3.2%, en what should the duration be on the loan to make this acceptable for both ckstar Financial and amazon if the cost of funds for Rockstar Financial is 5.5%? DA) 44.89 years B) 20 years C) 13.64 years D) 34.1 years E) 10.6 years

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

See similar textbooks

Similar questions

can it be solve please Useful Houseware Co. Ltd has received a $35,300 loan from Bank Corporation Limited. The annual payments are $4,589.81. If the company is paying 8.5% interest per year, how many loan payments must the company make? (Note on formatting: Round off to the nearest whole number.)
A loan has quarterly payments. The APR is 16%, and interest is compounded 12 time(s) per year. The effective interest rate that would be needed to find the payment amount for the loan is _%. Margin of error for correct responses: +/-.02 (%) Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your response. Do not round any intermediate work, but round your *final* response to 2 decimal places (example: if your answer is 12.3456, 12.3456%, or $12.3456, you should enter 12.35).
National Company has a P25,0000 line of credit at a 9% interest rate. The loan agreement requires a 3% compensating balance, which is based on the total amount borrowed, and which will be held in an interest-free account. What is the effective interest rate if the firm borrows P160,000 on the line of credit for one year? 8.67% 9.03% 8.78% 9.28%
Acacia Bank expects the euro to depreciate against the dollar and plans to take a short position in euros and a long position in dollars. Assume the following1. Interest rate on borrowed euros is 5 percent annualized2. Interest rate on dollars loaned out is 6 percent annualized3. Spot rate is 0.90 per dollar4. Expected spot rate in ten days is 0.95 per dollar5. Acacia Bank can borrow 10 millionDescribe the steps Acacia should take to profit from shorting euros and going long on dollars, show your calculations.
Bank K is about to sign a loan agreement with a mining company.The current LIBOR rate is 8%.The risk premium for the company has been estimated as 3% and the origination fee will be 0.1875 percent.The bank will be requesting a 9% compensating balance requirement.If the reserve requirement is 6%,what is the promised gross return on the loan?
A financial institution uses a loan base rate of 4.35% and sets the credit risk premium at 6.68%. The institution charges a 1.5% loan origination fee and imposes 3.22 % compensating balances. The required reserves for this institution are 10%. Additionally suppose your institution specifies the following linear probability model to estimate the probability of default: PD = Bo - Bi Wealth-B2Credit Score + B3 Number of Bankruptcics Bo = 10, 109.5 %3D B1 = 0.10 %3D B2 = 0.20 %3D B3 = 0.60 %3D Use the information above to answer the question. What is the gross rate of return on the loan? O 9.31% O 11.03% O 12.53% O 12.90%
Your company is considering three options for financing its short term operations i. Borrow Tk.25 million from Shuktara Bank at 15 percent interest rate and a 20 percent compensating balance requirement signing a 60 day promissory note. ii. Borrow Tk.25 million from Chandramukhi Bank at 15 percent discount interest. i. Forego discount on a trade credit on terms 3/10, net 50. Strictly based on effective cost, which option would you select and why?
15)
Suppose your firm is seeking a three-year, amortizing $400,000 loan with annual payments, and your bank is offering you the choice between a loan of $415,000 with a compensating balance of $15,000 and a loan of $400,000 without a compensating balance. The interest rate on the $400,000 loan is 9.5 percent. How low would the interest rate on the loan with the compensating balance have to be for you to choose it? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest rate 8.73 %
The Kangal Enterprise needs to increase its working capital by Rs 3.5 million for which it will borrow from the Banque de Fraude at 18% per year, for one year. Banque de Fraude is generously extending Kangal Enterprise a revolving credit of Rs 4.5 million, with a compensating balance of only 15.5% and commitment fees rate of 3.5%. Required [a] Calculate the interest on discount & collection basis [b] Calculate the overall cost of the annual revolving credit agreement [c] Approximately how much should Kangal Enterprise utilize of the precious 4.5 million revolving credit agreement, to fulfill its requirement of raising working capital by about 3.5 million and at what overall cost?
Please answer this quesiton thank you
Consider two 1-year loans with a principal of $1 million and a default probability of 2% each. Assume that if one loan defaults, the other does not. Assume that in the event of default, the loan leads to a loss that can take any value between $0 and $1 million with equal probability, i.e., the probability that the loss is higher than $x million is 1-x. If a loan does not default, it yields a profit equal to $0.02 million. a) Compute the 1-year 99% Value at Risk (VaR) and Expected Shortfall (ES) of a single loan. b) Compute the 1-year 99% VaR and ES for the portfolio of both loans. c) Does the VaR and the ES satisfy the subadditivity property in this case?

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS