The table below presents the costs of borrowing for Microsoft and Tesla, and the aSwap Bank quoteagainst LIBOR. Microsoft would like to get a $3,000,000.00 floating rate loan. Tesla would like to get a$3,000,000.00 fixed rate loan. How much can the swap bank profit from entering into a swap agreementwith Microsoft and another withTesla?Fixed-Rate Borrowing Cost Floating-Rate Borrowing CostMicrosoftTeslaSwap Bank Quote4.008.50LiborLibor+4.40BidAsk4.05%4.08%O $2,400O None of the alternativesO $600$1,500$900

Leveraging the differential in interest rates that exist between fixed and variable rates in the…

Answered: The table below presents the costs of…

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

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Use the following table to answer the question about the money supply given the following hypothetical data for an economy. Item Billions of Dollars $2,000 350 80 Checkable Deposits Small Time Deposits Currency Held By The Public Savings Deposits, Including Money-Market Deposit Accounts Money-Market Mutual Funds Held By Individuals Money-Market Mutual Funds Held By Businesses 1,300 600 700 Refer to the table above. The size of the M1 money supply is: Select one: O a. $1,940 O b. S2,730 O c. None of the above O d. S2,220 O e. $2,080 Activate Windows Go to Settings to activate
Suppose your broker charges $0.01 commission per share per trade (i.e. per side, and not round-trip). The exchange charges $0.025 per share per trade for removing liquidity and credits $0.014 per share per trade for adding liquidity. You want to run an electronic market-making strategy in a high-frequency setup. You post a below-market limit order (i.e. to add liquidity) to purchase 1,000 shares of a stock at $13.51 per share and your order is subsequently filled. (You get the credit.) If you buy and sell the share at the same price, what will be your net profit or loss per share in the roundtrip trade if you buy and sell by adding liquidity on both sides?
A large bank is quoting the following spot exchange rates for number of YEN per USD, number of THB per USD and number of YEN per THB respectively. YEN/USD = 116.91 -- 116.95 THB/USD = 44.30 -- 44.40 YEN/THB = 2.6900 -- 2.7100. You are trader at Axe Capital, a US hedge fund, and your job is to try to find arbitrages in the currency markets. You have 10 mio USD risk capital provided by your fund. Using the 10 mio USD risk capital, how much arbitrage (guaranteed risk-free) profit can you make. If there is no arbitrage possible, enter zero. Give your answer in USD to the nearest USD. Please Do your calculation in excel and do not round anything until the very end.
A Ltd, a low rated firm desires a fixed rate, long term loan, It currently has access to floating interest rate funds at a margin of 1.5% over the prime rate. Its direct borrowing cost is 13%in the fixed rate bond market. B Ltd which prefers a floating rate loan has access to fixed rate funds in cedi-bond market at 11% and floating rate funds at prime rate 1/2%. you are required to : (i)To explain how A Ltd and B Ltd can use swap to their advantage. (ii)Calculate how much Asaba Ltd would pay for its fixed rate funds.
Suppose that the assets of a bank consist of $100 million of loans of BBB-rated corporations. The PD for the corporations is estimated as 1%. The average maturity is five years and the LGD is 60%. What is the total risk-weighted assets for credit risk under the Basel II advanced IRB approach? Question 5Answer a. $178.1 million b. $13.2 million c. $165.4 million d. $100 million
Which can be considered as outcome(s) of an open market sale of 1 billionTL by Central Bank of Republic of Turkey (CBRT)? Your answer: In asset side of its balance sheet, the securities of the bank from which central bank buys securities increase by 1billionTL.. In asset side of its balance sheet, the reserves of the bank from which central bank buys securities increase by 1billionTL. Central bank reserves in liabilities side of its balance sheet decrease by 1 billionTL. Central bank securities in asset side of its balance sheet decrease by 1 billionTL.
fINANCE
3) Suppose there is a 10% reserve requirement, and the bank has the following Balance Sheet Assets Reserves Loans Securities Liabilities 55M Deposits 250M Bank Capital 45M 350M 50M Now, let's suppose there is a deposit outflow of $60 million. If the bank only finances its reserve shortages by borrowing from the Federal Reserve, show the bank's balance sheet after the deposit outflow and receiving the loan from the Fed.
Suppose that a commercial bank's current quote for transactions involving the United States dollar is A$1.3214 A$1.3298. (a) State the ask and bid prices for the bank. (b) Calculate the bid/ask spread for the bank.
Suppose XYZ Bank reports interest-sensitive assets of $670 million and interest-sensitive liabilities of $875 million. What is the bank’s dollar interest-sensitive gap? Its relative interest-sensitive gap and interest-sensitivity ratio?
A bank offers a corporate client a choice between borrowing cash at 9% per annum and borrowing Bitcoin at -5% per annum. The risk-free interest rate is 3% per annum, and storage costs are 7% per annum. The interest rates on the two loans are expressed with annual compounding. The risk-free interest rate and storage costs are expressed with continuous compounding. Suppose that the price of Bitcoin is $58,000 and the corporate client wants to borrow $1,160,000. Discuss whether the rate of interest on the Bitcoin loan is too high or too low in relation to the rate of interest on the cash loan. What is the correct rate of interest for Bitcoin loan?
Examine the Falance sheet for a bank below: Assets Liabilities Reserves 600 000 Demand Deposits 5 230 000 Loans 2 000 000 Capital 1 250 000 Buildings 3 880 000 If the desired reserve ratio changes to 5 percent and the bank were to loan out those excess reserves, what is the otential expa nsion in demand deposits (increase in MS) in the banking system? ***You just need to put the number in your answer, no units or commas*** Answer:

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