Tyson Inc. is entering into a 3-year pay-euros and receive-dollars cross currency swap. The 3-year swap interest rates are quoted in the table below. At what rate will Tyson receive dollars and at what rate will Tyson pay euros? Question 8 options: Receive at 2.28% and pay at 1.89% Receive at 2.23% and pay at 1.95% Receive at 2.28% and pay at 1.95% Receive at 2.23% and pay at 1.89%
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Tyson Inc. is entering into a 3-year pay-euros and receive-dollars cross currency swap. The 3-year swap interest rates are quoted in the table below. At what rate will Tyson receive dollars and at what rate will Tyson pay euros?
Question 8 options:
|
Receive at 2.28% and pay at 1.89% |
|
Receive at 2.23% and pay at 1.95% |
|
Receive at 2.28% and pay at 1.95% |
|
Receive at 2.23% and pay at 1.89% |
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- Amazon would like to get a floating rate loan $10,000,000. It can borrow at 7.92% or Libor + 1%. A swap bank quotes 7.55 - 7.64 against flat Libor. How much can Amazon save (in basis points) by entering a swap agreement? A put option with a strike of $1.22/£ has a premium of $0.690. The current spot exchange rate is $1.476/£. What is the option's time value?Current exchange rate (Feb 15, 2018) is .0090 $/Yen. You speculate the exchange rate will be .0087 $/Yen on Mar 15, 2018. You plan to make money in the currency exchange market through the 'Short-selling' method. In this case, the first step is you borrow ________. Group of answer choices Yen US$A company FORTIS, issued a 5 years loan with a gloating rate EURIBOR + 0.75%. It sets up a fixed / variable swap with a bank. The quotation of the swap is as follows: 5-year swap: EURIBOR /3.75%. What is the cost of borrowing of this company after swap? a. 0.75%b. 4.5%c. EURIBOR + 4.5%d. None of the above
- Amazon would like to get a floating rate loan $10,000,000. It can borrow at 7.93% or Libor + 1%. A swap bank quotes 7.49 - 7.65 against flat Libor. How much can Amazon save (in basis points) by entering a swap agreement? 56Two companies, Company A and Company B, are looking to enter into an interest rate swap agreement. Company A Company B Fixed rate 5% 6% Floating Rate 3-month LIBOR plus 1% 3-month LIBOR plus 1.5% Suppose that company A requires a floating-rate borrowing and company B requires a fixed- rating borrowing. A financial institution is planning to arrange a swap and requires 20bps spread. If benefits are equally shared both companies, what rate of interest will A and B pay?Company A and B has been offered the following rates per annum on a £10 million 5 - year loan. Company A Fixed (%) Floating (%) LIBOR + 1.2 B LIBOR + 0.3 Company A requires a floating rate loan, whereas company B requires a fixed rate loan. In which market does company A have a comparative advantage? Design a swap that will give a bank, acting as an intermediary 0.5% p.a. and that will appear equally attractive to both companies. Explain how to achieve this, using diagrams and text.
- Use the following information about an interest rate SWAP contract to answer the following question. Assume ½ for the date count fraction. (Do not round intermediate calculations.) If Bank of America wants to make a book P/L of $30,000, what adjustment should it make to its LIBOR floating payments? Counter Parties Notional Principal Fixed Rate payer Fixed Rate Floating Rate Payer Floating Rate Floating Rate Reset Effective date Maturity Date Barclays & Bank of America $8,000,000 Barclays 6% (s.a.) Bank of America LIBOR+???bp (s.a.) 6 months December 21, 2020 December 21, 2023 Term (Years) Pay rate zero Discount Factor Receive rate zero 0.5 5.25% 0.9747 5.33% Discount Factor 0.9744 1 5.78% 0.9454 5.88% 0.9445 1.5 5.97% 0.9167 6.17% 0.9141 2 6.22% 0.8863 6.33% 0.8845 2.5 6.31% 0.8582 6.43% 0.8557 3 6.39% 0.8304 6.51% 0.8276 Provide you answer in basis points, rounded to two decimal points. Recall that 1% = 100 basis points. The following numbers are meant to provide guidance for…Please use the following information to answer You have account paybles: ₤5 m in one year.InterestUS: 6.10% per annum & InterestUK: 9% per annumSpot exchange rate: $1.50/£ & Forward exchange rate: $1.46/£ (1-year maturity)Call option strike price: $1.46/£ & Put option premium: $0.02/£How much will you receive in $ if you use the forward contract hedge? You must show all work to earn credit. No credit will be given without supporting work. 5,000,000 GBP x $1.46 = $7,300,000 $7,300,000 x 6.10% x 1 year = $445,300 $7,300,000 + $445,300 = $7.7453 million 2. Draw a graph for the forward contract hedge. (X axis is the spot rate in the future. Y axis is “$ cash paid.”)Company A and B has been offered the following rates per annum on a £50 million, 10 - year loan. (SEE PICTURE) Design a swap that is most beneficial to Company A, explain using text and diagram
- Please explain all calculations and actions please: You are about to sign an interest swap to pay fixed and receive floating. The quote is 4.5-4.7% against LIBOR flat. The principal is 100,000. What is the value of the swap? (please use a fixed rate to discount the cash flows.) Round to the nearest US cent (2 decimal places).Companies A and B want to borrow €10 million each (they want to issue debt) for years. The market offers them the following alternatives (Symbol for floating rate: L). Company A) Floating rate: L + 1.5%, Fix rate: 2.0%. Company B) Floating rate: L+ 3.0%, Fix rate: 5.0%. A financial institution arranges a swap and charges 10 basis points (0.1%) per year. If the swap is organized so that it is equally attractive to both companies: What is the net rate of interest that will end up paying company A and BOne has the following data regarding spot and 1 year forward for USDCHF Spot 1.2500 F 1.2000 # of CHF to buy 1 USD US interest rate 5.00% Swiss interest rate 3.14% All quotes above are "market"quotes, i.e. one can buy or sell USD, borrow or lend, at the stated rates. A practioner would say that the quote for F seems "out of line", thus there could be an arbitrage opportunity. What would be profit in USD from arbitrage on a notional amount of 100,000,000 USD? 2,031,250 2,437,500 2,949,375 1,950,000