You Answeredorrect AnswerA one-year floating-rate note pays 6-month Libor plus 119 bps.The floater is priced at96.93 per 100 of par value. Current 6-month Libor is 1.78%.Assume a 30/360 day-countconvention and evenly spaced periods. What is the annualdiscount margin for the floater in basis points?304.42440.31 margin of error +/- 1%First, find the semiannual coupon amount. Then find theyield on the bond given the price. Finally, figure out whatpart of the yield is the discount margin.

The information given is as follows:Time to maturity= 1 year6-Month Libor= 1.78%Quoted margin= 119…

Answered: You Answered orrect Answer A one-year…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter12: Current Liabilities

Section: Chapter Questions

Problem 15MC: Marathon Peanuts converts a $130,000 account payable into a short-term note payable, with an annual...

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A one-year floating-rate note pays 6-month Libor plus 90 bps. The floater is priced at 98.67 per 100 of par value. Current 6-month Libor is 1.17%. Assume a 30/360 day-count convention and evenly spaced periods. What is the annual discount margin for the floater in basis points?
A two-year Italian floating-rate note pays three-month Euribor of -0.50% plus 250 bp. The floater is priced at 99 per 100 of par value. Assuming the 30/360 day-count convention and evenly spaced periods, the discount margin for the floater is closest to: A. 251 bps B. 201 bps C. 301 bps
Handley Bank advertises that its standard lending rate is 12% per annum compounding quarterly. Which of the following rates represent effective rates that are consistent with the Handley Bank quoted rate (to two decimal places)? Group of answer choices A. More than one of the other options are correct B. 12.68% per annum compounding annually C. None of the other options are correct D. 3.00 % per quarter compounding quarterly E. 1.00 % per month compounding monthly
A firm sells its accounts receivables to a factor at a 3.5% discount. The average collection period is 3 month. a. What is the effective annual interest rate on this arrangement? (Round your answer to 2 decimal places.) b. What is the implicit effective annual interest rate if the average collection period is 5 months? (Round your answer to 2 decimal places.)
A firm is offered trade credit terms of 3/15, net 45 days. The firm does not take the discount, and it pays after 67 days. What is the nominal annual cost of not taking the discount? (Assume a 365-day year.) Show your completesolution.
An investor is considering the purchase of a 2-year floating-rate note that pays interest semiannually. The coupon formula is equal to 6-month T-Bill rate plus 80 basis points quoted margin. The current value for 6-month T-bill rate is 5% (annual rate). The price of this note is 98.7068. What is the discount margin?
Kingbird, Inc. purchased merchandise with an invoice price of $3600 and credit terms of 3/12, n/30. Assuming a 360-day year, what is the implied annual interest rate inherent in the credit terms? 40% 3% 6% 60%
Percentages need to be entered in decimal format, for instance 3% would be entered as .03. Cooley Industries needs an additional $500,000, which it plans to obtain through a factoring arrangement. The factor would purchase Cooley's accounts receivables and advance the invoice amount, minus a 2% commission, on the invoices purchased each month. Cooley sells on terms of net 30 days. In addition, the factor charges a 12% annual interest rate on the total invoice amount, to be deducted in advance. (This information is shown on the spreadsheet provided.) What amount of accounts receivable must be factored to net $500,000? If Cooley can reduce credit expenses by $3,500 per month and avoid bad debt losses of 2.5% on the factored amount as shown on the spreadsheet, what is the total dollar cost per month of the factoring arrangement? What would be the total cost of the factoring arrangement if Cooley's funding needs rose to $750,000? Would the factoring arrangement be profitable under…
Percentages need to be entered in decimal format, for instance 3% would be entered as .03.) Cooley Industries needs an additional $500,000, which it plans to obtain through a factoring arrangement. The factor would purchase Cooley's accounts receivables and advance the invoice amount, minus a 2% commission, on the invoices purchased each month. Cooley sells on terms of net 30 days. In addition, the factor charges a 12% annual interest rate on the total invoice amount, to be deducted in advance. (This information is shown on the spreadsheet provided.) Would it be to Cooley's advantage to offer to pay the factor a commission of 2.5% if it would lower the interest rate to 10.5% annually? Assume the firm needs $500,000. Explain your answer. Assume a commission of 2% and an interest rate of 12%. What would be the total cost of the factoring arrangement if Cooley's funding needs rose to $650,000? Would the factoring arrangement be profitable under these circumstances? Why or…
In October 2008, six-month (182-day) Treasury bills were issued at a discount of 1.42%. What was the annual yield? Assume 365 days in a year. (Do not round intermediate calculations. Enter your answer as a percent rounded to 3 decimal places.)
A firm is offered trade credit terms of 3/15, net 30 days. The firm does not take the discount, and it pays after 50 days. (Assume a 365-day year.) A. The number of compounding period is ___. B. How much is the rate per period? C. How many days are there per period? D. What is the annual nominal rate of not taking this discount?
Suppose that the 9-month and 12-month LIBOR rates are 4% and 4.2%, respectively. What is the value of an FRA where 5% is received and LIBOR is paid on £1 million for the quarterly period? All rates are quarterly compounded and expressed as per annum. Assume that LIBOR is used as the risk-free discount rate. Select one: a. £478.115 b. £422.870 c. £479.062 d. £426.132

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