The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months' time, and hedge the position now with an FRA. What is the treasurer's break-even forward rate of interest, assuming no other costs? Multiple Choice O O O 5.50% 6.00% 7.30% 6.91% 6.50%
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- Mf2. The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months’ time, and hedge the position now with an FRA. What is the treasurer’s break-even forward rate of interest, assuming no other costs?The treasurer of a small bank has borrowed funds for 3 months at an interest rate of 5.50% and has lent funds for 9 months at 6.50%. The total amount is USD25 million. To cover his exposure created by the mismatch of maturities, the dealer needs to borrow another USD25 million for 6 months, in 3 months' time, and hedge the position now with an FRA. What is the treasurer's break-even forward rate of interest, assuming no other costs? Multiple Choice O O O O 6.91%. 5.50% 7.30%. 6.00% 6.50%.Suppose that you owe $2,000 on a credit card that charges 18% APR and you pay either the minimum 10% or $20, whichever is higher, every month. How long will it take you to eliminate the debt? Assume that the bank uses the previous-balance method to calculate your interest, meaning that the bank does not subtract the amount of your payment from the beginning balance but charges you interest on the previous balance.
- A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? $8,177.5 $8,228.6 $8,366.9 $8,401.1Suppose that the household, with the same P10,000 per month earnings, decides to deposit P3,333.33 in checking account and P6,666.67 in a bond fund. Assume that the bond fund pays 1.5% interest per month or an annual interest rate of 18% and that a month has 30 days. After 10 days the money in the checking account has been depleted and decides to pull from the bund fund another 10,000 and deposited into checking account to finance a 10-day expenses. How much is the average quantity of money it demands per month? * O P10,000 O P3333.333 PO P1500Duncan Brooks needs to borrow $500,000 to open new stores. Brooks can borrow $500,000 by issuing 5%, 10-year bonds at 96. How much will brooks actually receive in cash under this arrangement? How much must Brooks pay back at maturity? How will Brooks account for the difference between the cash received on the issue date and the amount paid back? Brooks prefers to borrow for longer periods when interest rates are low and for shorter periods when interest rates are high. Why is this a good business strategy
- NTA Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, NTA Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will NTA Co. need to borrow?I'm not sure what I'm doing wrong here. Please help me. Warren Ford borrowed $15,000 on a non-interest bearing simple discount note at 5.75% for 90 days. Assume ordinary interest. 1. What is the maturity value? 2. What is the bank's discount? 3. What is Warren's proceeds? 4. What is the effective rate? Round to the nearest hundredth percent.A bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100) borrowed when an overdraft occurs. a. What amount of interest would the customer pay for a $188 overdraft? (Assume the interest is for the full amount borrowed for whole year.) b. How much would be saved by using the overdraft protection loan if a customer has three overdraft charges of $30 each during the year?
- A Treasurer buys a 6-month CD issued by a top-class bank with a tenor of 180 days at a yield of 16%. The face value at issue is GH¢10m. In 90-days time the buyer sells the CD when the 3-month secondary market for CDs issued in the names of top-class banks is 40/14.50. The buyer has held the CD for 90days, but now wants his cash back. What is the return on the investment for the Treasurer? Prepare a Cash forecast for the below information The sales and purchases for Ahemba Ltd are as follows: Month April May June Credit Sales $160,000 $140,000 $192,000 Credit Purchase $ 68,000 $64,000 $80,000 The company will pay wages of $8,000, $7,000 and $8,400 in April, May and June respectively. Interest payments are 3,000 per month during the period. The company will purchase equipment costing $50,000 and $4,000 in June. Ahemba Ltd estimates that 10% of its sales will be collected in the…National Co. needs to borrow P300,000 for the next 6 months. The company has a line of credit with a bank that allows the company to borrow funds with a 10% interest rate subject to a 20% of loan compensating balance. Currently, National Co. has no funds on deposit with the bank and will need the loan to cover the compensating balance as well as their other financing needs. How much will National Co. need to borrow?Bank A pays 2% interest compoundedannually on deposits, while Bank B pays 1.75% compounded daily.a. Based on the EAR (or EFF%), which bank should you use?b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest.