1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Gnesinka [82]
3 years ago
12

XYZ Corp owns a 3-year $10 million par floating rate bond. The coupons on the bond are 12-month LIBOR. XYZ would like to hedge a

gainst interest rates falling by entering into an interest rate swap with a $10 million notional that receives a fixed rate and pays a floating rate (12-month LIBOR). You are given the following prices for zero coupon bonds. Years to Maturity Zero-coupon Bond Price 1 0.99 2 0.97 3 0.93 Calculate the fixed rate XYZ Corp would receive on the swap.
Business
1 answer:
malfutka [58]3 years ago
3 0

Answer:

 2.45%

Explanation:

The computation of the fixed rate is shown below:

Years to maturity   Zero coupon  bond price  YTM      Forward rate

1                                 0.99                     1.01%  

2                                      0.97                             1.53%       2.06%

3                                      0.93                            2.45%     4.30%

The fixed rate should be equivalent to the YTM of the 3 year bond i.e. 2.45% the same is to be considered

You might be interested in
An investor purchased a property for $350,000. The investor paid a $150,000 down payment and obtained a $200,000 mortgage. The g
mylen [45]

Answer:2.68

Explanation:

divide the income into the expenses

8 0
2 years ago
M1 is the
Elodia [21]

Answer:

B. money market funds

Explanation:

The most limited definition of money, M1, consists just of cash and various bank accounts that allow check writing. Money in circulation includes cash, traveler's checks, demand deposits, and other types of checkable deposits.

7 0
1 year ago
A three-month HP put option with an exercise price of $60 sells for a premium of $8. The put is in the money only if the price o
Mkey [24]

Answer:

less than $60 per share

Explanation:

A put option is the money when the exercise price is greater than the asset price, thus the put has to be less than $60

3 0
3 years ago
Read 2 more answers
Companies A and B each have the same level of total assets, the same tax rate, and the same earnings before interest and taxes (
anygoal [31]

Answer:

a.Company A has a lower return on assets (ROA).

c.Company A has a lower times interest earned (TIE) ratio.

That is options a and c

Explanation:

For company A to have high debt ratio means it has a higher debt which will reduce earnings. Company A's earnings will be less than Company B's.

ROA= Net income/Total assets

Since Company A's income is less than Company B's ROA for Company A will be less than that for Company B.

TIE = Earnings before Interest and Tax/Interest

Due to higher debt of company A it's interest will be higher resulting in low TIE.

5 0
3 years ago
When there is a shortage, rationing is a method of distributing goods by using prices.
Cerrena [4.2K]
True, rationing is the selling of scarce goods or services in events such as war. Items are distributed in fairness to each citizen and they have to take a ration book to say what they have or haven't had and how much of it they have had.
6 0
3 years ago
Other questions:
  • Credits to customer accounts and credits to other accounts are individually posted from a cash receipts journal such as the one
    8·1 answer
  • Toxemia Salsa Corporation manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The
    15·1 answer
  • Which of the following is true of manufacturing? a.It does not require an organizational strategy. b.It creates time utility for
    6·1 answer
  • A florist who has been in business for several years finds himself facing several problems simultaneously. First, he has a large
    11·1 answer
  • When reviewing an application, the employer is most concerned about
    14·1 answer
  • The Raw Materials Inventory account had a balance of $13,463 on January 1. During the month of January, the company had the foll
    10·1 answer
  • The balance sheet of Cattleman's Steakhouse shows assets of $86,000 and liabilities of $14,400. The fair value of the assets is
    11·1 answer
  • A firm have an inventory turnover of 5 times a year on a cost of goods sold of $800 000.if the firm improves the inventory turno
    6·1 answer
  • Who is responsible for following label instructions for using animal care products, or medications in the food supply continuum?
    5·1 answer
  • which trade sanction (embargo or subsidy) would be more effective in protecting domestic jobs? EXPLAIN WHY!!!
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!