The rates in one month’s time are revealed as follows:Term           % Sterling rate1 month      5.05-5.302 months    5.05-5.353 months    5.20-5.254 months    5.25-5.35What is the deposit rate that would have been available for the treasurer in the unhedged situation? Compare this rate with the hedged rate at which the £1m is deposited and comment on the hedge.

You purchase a certificate of deposit and expect an inflation rate of 1.25% over the next year. Your nominal rate of interest is 2.1%. What is your expected real rate of return? O 0.85%O 1.25% -2.1% O -0.85%

Amortize Discount by Interest Method On the first day of its fiscal year, Ebert Company issued $12,000,000 of 5-year, 11% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, resulting in Ebert Company receiving cash of $11,558,459. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round amounts to the nearest dollar. If an amount box does not require an entry, leave it blank. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry. leave it blank.

How do interest expense and the carrying value of the note change over time for an installment note with fixed monthly loan payments?

8. Solve for maturity value, discount period, bank discount, and proceeds. Assume a bank discount rate of 9%. Use the ordinary interest method. (Use Days in a year table.) Note: Do not round intermediate calculations. Round your final answers to the nearest cent. Face value (principal) Rate of interest Length of note Maturity value date of note date note discounted discount period bank discount proceeds $25,000 9% 60 days   June 8 July 10

Suppose that a bank does the following: a. Sets a loan rate on a prospective loan with BR = 4.23% and ϕ = 3.16%. b. Charges a 0.33 percent loan origination fee to the borrower. c. Imposes a 9 percent compensating balance requirement to be held as noninterest-bearing demand deposits. d. Holds reserve requirements of 8 percent imposed by the Federal Reserve on the bank’s demand deposits. Calculate the bank’s ROA on this loan.