The US Govemment wanted to auction $600 million worth of 1-year Treasury Bills. Bidsfor $100 million worth of Treasury Bills were submitted on a non-competitive basis.InstitutionAmount BiddedPriceBank 1$100 m$50 m$150 m$50 m$100 m$100 m$175 m98.0Bank 297.5Bank 397.096.5Bank 4Bank 596.0Bank 695.5Bank 795.0(a)Based on the competitive bids submitted, describe, using a table, how youdetermine the price:(i)(11The stopped-out priceThe allocations to banks 4, 5 and 6 (b)You have $1,000 to invest for two years and have two choices:Altemative 1: 2-year zero coupon bond selling at a price of 92.Altemative 2: A bank deposit which pays according to the following rates:1 year spot rate3 year spot rate1 year forward rate two years from now3.0%4.5%4.0%Analyse the altematives to determine the amount received from each alternativeat the end of two years. (Give answer to nearest dollar)

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The US Govermment wanted to auction $600 million worth of 1-year Treasury Bills. Bids for $100 million worth of Treasury Bills were submitted on a non-competitive basis. Institution Amount Bidded Price Bank 1 $100 m 98.0 Bank 2 $50 m $150 m $50 m $100 m $100 m $175 m 97.5 Bank 3 97.0 Bank 4 96.5 Bank 5 96.0 Bank 6 95.5 Bank 7 95.0 (a) Based on the competitive bids submitted, describe, using a table, how you determine the price: (i) The stopped-out price (ii) The allocations to banks 4, 5 and 6

The US Govermment wanted to auction $600 million worth of 1-year Treasury Bills. Bids for $100 million worth of Treasury Bills were submitted on a non-competitive basis. Institution Amount Bidded Price Bank 1 $100 m 98.0 Bank 2 $50 m $150 m $50 m $100 m $100 m $175 m 97.5 Bank 3 97.0 Bank 4 96.5 Bank 5 96.0 Bank 6 95.5 Bank 7 95.0 (a) Based on the competitive bids submitted, describe, using a table, how you determine the price: (i) The stopped-out price (ii) The allocations to banks 4, 5 and 6

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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The Treasury plans to issue $100 million of 52-day Treasury Bills using a Dutch auction system. They received $55 million in non-competitive bids. They also received the following competitive bids: Broker-dealer A bids $40,000,000 at 11.70% Broker-dealer B bids $14,000,000 at 11.50% Broker-dealer C bids $18,000,000 at 10.80% Broker-dealer D bids $15,000,000 at 10.50% Broker-dealer E bids $18,000,000 at 9.90% Broker-dealer F bids $17,000,000 at 9.60% At what rate will the auction clear and what amounts do each broker-dealer receive?
The example below will highlight the Dutch auction process for U.S. government securities. Assume the following bids were received by the BFS for a planned issue of $1,000,000 of 13-week T-Bills. Non-competitive Bids A total of 6 non-competitive bids amounting to $200,000 was received. Competitive Bids A total of five competitive bids was received. a. $250,000 at 3.1% b. $300,000 at 3.0% c. $175,000 at 2.9% d. $300,000 at 2.8% e. $200,000 at 2.7% Since only $800,000 will be allocated to the competitive bidders, the selection will begin at the bottom at 2.7% and move up till the desired amount is reached. In this example, the rate that clears $800,000 is a. 3.1% b.3.0% c. 2.9% d. 2.8% e. 2.7% a b c d e
Three different banks have sent their special quotation to Mr Hertz. Based on the quotation given below, Mr Hertz instructed you to determine the triangular arbitrage profit for Cherry Blink if you are given CHF5,000,000. Bid Ask Bank X CHF 0.9855/USD CHF 0.9858/USD Bank Y CHF 0.117/HKD CHF0.1174/HKD Bank Z USD 0.1279/HKD USD 0.1283/HKD
In a Treasury auction of $2 billion par value 91-day T-bills, the following bids were submitted: Bidder Bid Amount Price per $100 1 $500 million $99.40 2 $750 million $99.01 3 $1.5 billion $99.25 4 $1 billion $99.36 5 $600 million $99.39 If only these competitive bids are received, who will receive T-bills, in what quantity, and at what price?
An investor in England purchased a 91 day US Treasury bill for 987.65. (Treasury bills are discount bonds that pay $1000 at maturity.) When the T-bill was purchased, the exchange rate was $1.75 per pound. At maturity, the exchange rate was $1.83 per pound. What was the investor’s holding period return in pounds? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
What is the contribution to the asset base of the following items under the Basel III requirements? $10 million cash reserves. $50 million 91-day U.S. Treasury bills. $25 million cash items in the process of collection. $5 million UK government bonds, OECD CRD rated 1. $5 million French short-term government bonds, OECD CRD rated 2. $1 million general obligation bonds. $40 million repurchase agreements (against U.S. Treasuries). $2 million loan to foreign bank, OECD rated 3. $500 million 1–4 family home mortgages, category 1, loan-to-value ratio 80 percent. $10 million 1–4 family home mortgages, category 2, loan-to-value ratio 95 percent. $5 million 1–4 family home mortgages, 100 days past due. $500 million commercial and industrial loans, AAA rated. $500 million commercial and industrial loans, B- rated. $100,000 performance-related standby letters of credit to a AAA rated corporation. $100,000 performance-related standby letters of credit to a municipality issuing general obligation…
In September 1, 20X1, True North Ltd. a Canadian company, entered into an agreement with Langdon Ltd, a foreign company, to purchase inventory for 100,000 FC. The inventory is to be delivered on February 15, X2. According to the agreement, True North will make payment on March 15, 20X2. On September 2, 20X1, True North’s bank arranged for a 100,000 FC hedge against True North’s commitment to Langdon. The spot rate on September 2 was 1 FC = $3.60 CDN, and the March 15, 20X2 rate was 1FC = $3.66 CDN. At True North’s December 31, 20X1 year end, the spot rate was 1FC= $3.63 CDN and the forward rate for march 15, 20X2 was 1FC=$3.65 CDN. With Langdon delivered the merchandise to True North on February 15, 20X2, the spot rate was 1 FC = $3.66 CDN and the forward rate was 1FC=$3.675 CDN. True North paid Langdon on March 15, as required. On that date, the spot rate was 1FC= $ 3.69 CDN. The hedge arranged by True North is a cash hedge, Prepare the journal entries to record the acquisition…
Max Ltd sells equipment to Star Ltd, a U.S. company on 30/01/2020 for US$250,000. Goods are invoiced in US dollars. Payment is made on 5/03/2020. The company also buys parts from the USA, also invoiced in US$, value US$187,500 on 20/4/2020. The functional currency of Max Ltd is AUD$. As at 30/06/2020, this debt unpaid. Rates: 30/01 – A$1 = US$0.93 5/03 – A$1 = US$0.92 20/4 – A$1 = US$0.94 30/6 – A$1 = US$0.91 Required: SHOW YOUR WORKINGS Prepare journal entries for the above transactions. (Round answers to the nearest dollar, e.g. $200,263.57 = $200,264).
Suppose a bank provides the following quotes: Bid 1.2567 CAD per U.S. Dollar and Ask 1.2682 CAD per U.S. Dollar Suppose you would like to buy Canadian Dollars and sell U.S. Dollars. Given the quotes above, what rate would you receive? Group of answer choices 0.0115 CAD per USD 2.5249 CAD per USD 1.2682 CAD per USD 1.2567 CAD per USD
An Austra ian companv has decided to issue a 90-dav bank-accepted bill domestically to raise additionafunding of S18000 to buy equipment. If the bank has agreed to discount the bill at a yield of 8.5% per annum,which of the following values will the face value of the bill be closest to? a.S17913.31 b.S17641.62 O c.S18744.81 d.$18377.26 e.s17630.48 f.s18000.00 g.S18382.50.
The CFO of a US corporation is considering borrowing £500 million British pounds at a cost of 4% per year. The corporation will deploy the proceeds received to expand its lines of business. Explain what will happen to corporate earnings if the proceeds invested from the funds raised can earn 7% per year. Explain what will happen to corporate earnings if the proceeds invested from the funds can earn 1% per year. Discuss what will happen to the US Corporation’s US denominated consolidate outstanding if the exchange rate of US/UK is $1.50/£1.00 at the time of the date of the borrowing but changes to US/UK of $2.00/£1.00 over time. Based on your answers to (a) and (b), describe the advantages and disadvantages of the use of financial leverage?
In 20X2, Canterra Company invested $2,600,000 CDN (800,000FC) to establish a foreign subsidiary, Forterra Ltd. Forterra took out a $320,000FC bank loan to help finance the purchase of equipment and furniture. At the time the loan was taken out, the exchange rate was 1FC = $3.40 CDN. The loan principal is not required to be repaid for five years. Forterra purchased equipment costing 960,000FC when the exchange was 1FC = $3.30 CDN. Forterra had a very successful first year of operations and decided to purchase a tract of land for 320,000FC. The exchange rate at the time of purchase was 1FC = $2.90 CDN. Forterra's policy is to declare and pay dividends at its year-end. Both Canterra and Forterra have December 31 year-ends. Forterra has provided the following information: Requested a. Calculate Forterra's cumulative translation gain/loss for 20X3 using the presentation currency method.

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