### Bay Street Bankcorp: Hedging interest rate risk with financial futures.

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Your firm currently has $100 million in debt outstanding with a 10% interest rate. The terms of the loan require the firm to repay $25 million of the balance each year. Suppose that the marginal corporate tax rate is 40%, and that the interest tax shields have the same risk as the loan. What is the present value of the inter

I need help with these questions in relation to the attached. It needs to be only 350 words long. 1. How does this revenue mix compare with the revenue blend of the not-for-profit entity, St. Jude Children's Research Hospital (ALSAC)? Access the latest SEC filing and compare the reported revenue mix; has it changed? 2. Wha

The Cheyenne golf and tennis club requires its members to purchase stock in the corporation and to make a deposit of $10,000. The deposit is to be repaid in 30 years, and no interest is charged. Is the deposit subject to the imputed interest rules for below-market loans?

Please answer the attached two questions. Suppose $10,000 is invested at an annual rate of 5% for 10 years. Find the future value if interest is compounded as follows. a. Annually b. Quarterly c. Monthly d. Daily (365 days

If not explicitly stated always assume payments are made at the end of the period. 1.The Derr-McGee Manufacturing Company plans to build a new $50,000 warehouse seven years from now. They plan to accumulate the $50,000 in an account before beginning construction. If money is worth 7% compounded annually, how much must each ye

Market interest rates and bond prices are: a. unrelated. b. inversely related. c. directly related d. usually the same

How do you explain the existence and success of firms that are highly leveraged? In fact, some have a capital structure that is 100% debt?

For each of the cases in the following table: Calculate the future value at the end of the specified deposit period. Case Amount of initial deposit Compounding period Interest rate for compounding period Deposit period (years) Deposit at end of each year A $25,000 Monthly 0.50 10 $2,500 B $50,000 Biann

Suppose that compound interest is earned on a certain investment, with an interest conversion period of six months. Calculate the interest rate "p%" necessary to double the initial principal in four years.

Year........Population 1980..........67.38 1981..........69.13 1982..........70.93 1983..........72.77 1984..........74.66 1985..........76.60 1986..........78.59 Consider the formula P=67.38*(1.026)t P=Population of Mexico in year t where t is the number of years from 1980. Confirm that this forumula gives the same

Loan Scenarios Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow $500,000. The bank offers a rate of 8¼ percent with a 20 percent compensating balance requirement, or as an alternative, 9¾ percent with additional fees of $5,500 to cover services the bank

Your firm is considering the following three alternative bank loans for $1,000,000: a) 10% loan paid at year end with no compensating balance b) 9% loan paid at year end with a 20% compensating balance c) 6% loan that is discounted with a 20% compensating balance requirement Assume that you would normally no

On January 1, 2003, a company's accounts receivable balance was $8,900 and the allowance for doubtful debts was $600. This information came from the December, 31 2002 balance sheet. During 2003, The company reported $77,000 of credit sales. During 2003, $400 worth of receivables were written off as uncollectible. Cash collection

Does interest rate parity imply that interest rates are the same in all countries? Why might purchasing power parity fail to hold?

Tom Sander is a loan officer with Miami National Bank. The bank typically charges 8% APR on loans with a compensating balance requirement of 10%. In order to be competitive with other banks, Sanders will adjust the loan rate based on a customer's compensating balance level. A customer maintaining a balance greater than 10% will

a. Why do investors require firms issuing commercial paper to be of high creditworthiness? b. Why are interest rates on short-term loans not necessarily comparable to each other? Give three possible reasons.

What is a loan amortization schedule? How would you use it to determine your loan interest rate? What factors would affect your choice between two loans?

For a firm paying 7% for a new debt, the higher the firm's tax rate A. The higher the after-tax cost of debt B. The lower the after tax cost of debt C. After tax cost is unchanged D. Not enough information to judge

1. On June 30, 1999, Counting Crows Company issued 12% bonds with a par value of $800,000 due in 20 years. They were issued at 98 and were callable at 104 at any date after June 30, 2007. Because of lower interest rates and a significant change in the company's credit rating, it was decided to call the entire issue on June 30,

Tom Sander is a loan officer with Miami National Bank. The bank typically charges 8% APR on loans with a compensating balance requirement of 10%. In order to be competitive with other banks, Sanders will adjust the loan rate based on a customer's compensating balance level. A customer maintaining a balance greater than 10% will

How much difference do you think it makes for your bank account whether there is continuous compounding of interest, or only monthly or annual compounding? Do you ever try to make the interest calculations yourself for the interest you earned?

Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000. a. How much can Y deduct from the bill if Y pays on day 30? b. What is the effective annual rate of interest if Y pays on the due date rather than on day 30? c. How would you expect payment terms to change if i. The goods are perishable. ii

You are a financial analyst and you have a client that wants to retire in 30 years with $1 Million. Your bank's interest rate is 6.7%. Design a financial plan for them. How much would be their initial deposit? Would you use simple or compound interest? Would you compound the interest annually or monthly? What would be your

1) Your savings account offers monthly compounding. If your money doubles in 5 years what is the EAR and APR on the account? 2) The Jet Co. has an $80,000 line of credit with a 12% interest rate and a 10% compensating balance requirement which is based on the total amount borrowed. What is the effective annual interest rate i

If the nominal interest rate is 7.5% and the expected inflation rate is 4%, what is the real rate of interest? a) Less than 3.5% b) Exactly 3.5% c) Between 3.5% and 3.7% d) Over 3.7% but less than 11.5% e) Exactly 11.5% f) More than 11.5% g) The real rate of interest cannot be determined from the information provided.

3. Two firms, No Leverage, Inc., and High Leverage, Inc., have equal levels of operating risk and differ only in their capital structure. No Leverage is unlevered and High Leverage has $500,000 of perpetual debt in its capital structure. Assume that the perpetual annual income of both firms available for stockholders is paid

Please help with the following finance problems. Provide brief answers for each. a. Assume that interest rates have increased substantially. Would this tend to increase or decrease the market value of a firm's liabilities (relative to the book value of liabilities)? b. Suppose you are a manager in a manufacturing busines

6-1 The following yields on U. S. Treasury securities were taken from a recent financial publication: Term Rate 6 months 5.1% 1 year 5.5 2 years 5.6 3 years 5.7 4 years 5.8 5 years 6.0 10 years 6.1 20 years 6.5 30 years 6.3 a. Plot a yield curve based on these data. b. What type of yi

Kellogg Company manufactures its products in 20 countries and distributes them in more than 150 countries. Not too long ago, Kellogg was considering three short-term borrowing alternatives: 1) 90 day commercial paper at a 6.50% discount rate 2) Commercial bank loan with three interest rate alternatives: a) Prime rate with