Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Roo-Fus Inc. wants to issue a Eurobond to finance its international expansions.
It can choose between two bank syndicates that are willing to back the Eurobond issue, with the following fee schedules:
| ANZ | Westpac | |
| Principal | 393950 | 393950 |
| Maturity | 4 | 4 |
| Syndication fee | 2.16% | 1.86% |
| Interest rate p.a. | 6% | 3.01% |
| Coupons per year | 2 | 4 |
Roo-Fus Inc. is otherwise indifferent between the two banks, so it will choose the offer with the lowest effective annual interest rate for the first payment period.
What is that effective annual interest rate?
Select one:
a. 0.03067
b. 0.06132
c. 0.03010
d. 0.03527
e. 0.02760
f. None of these answers is correct
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