Review question 1 • A‐Firm and B‐Firm each need $3 million in funds and are quoted the following rates in the fixed and
Posted: Mon Nov 15, 2021 5:08 pm
Review question 1
• A‐Firm and B‐Firm each need $3 million in funds and are quoted the following rates in the fixed and floating markets. If A‐Firm accepts the fixed‐rate funds and B‐Firm the floating‐rate funds, structure a swap where they both benefit equally. Show your calculations.
A – fixed: 5.3 per cent; floating: BBSW + 1 per cent;
B – fixed: 6.3 per cent; floating: BBSW + 1.4 per cent.
A. How much can each company reduce their borrowing rates by if they wish to share the benefits equally?
B. Structure a swap so that A‐Firm will have two‐third of the total benefit and B‐ Firm will have one‐third of the benefit.
Review question 2
• Company A and Company B each need $10 million in funds and are quoted the following rates in the fixed and floating markets. If A accepts the fixed‐rate funds and B the floating‐rate funds, structure a swap where they both benefit equally. Show your calculations.
A – fixed: 3.3 per cent; floating: BBSW + 1.6 per cent;
B – fixed: 5.1 per cent; floating: BBSW + 2 per cent.
A. Structure a swap so that the two companies share the benefit equally.
B. How would the swap rates change if company A negotiates to get 0.2% more than company B?
Review question 3
What arbitrage strategy can be used if the following rates are observed in the market and what will be the risk free profit amount?
• USD1 = AUD 1.3000
• USD1 = SGD 1.3000
• AUD1 = SGD 1.1800
Review question 4
Given the following rates, what arbitrage profit may be made with respect to the Australian dollar?
• USD 1 = AUD 1.70
• USD 1 = SGD 1.70
• AUD 1 = SGD 0.96
need asap please help
• A‐Firm and B‐Firm each need $3 million in funds and are quoted the following rates in the fixed and floating markets. If A‐Firm accepts the fixed‐rate funds and B‐Firm the floating‐rate funds, structure a swap where they both benefit equally. Show your calculations.
A – fixed: 5.3 per cent; floating: BBSW + 1 per cent;
B – fixed: 6.3 per cent; floating: BBSW + 1.4 per cent.
A. How much can each company reduce their borrowing rates by if they wish to share the benefits equally?
B. Structure a swap so that A‐Firm will have two‐third of the total benefit and B‐ Firm will have one‐third of the benefit.
Review question 2
• Company A and Company B each need $10 million in funds and are quoted the following rates in the fixed and floating markets. If A accepts the fixed‐rate funds and B the floating‐rate funds, structure a swap where they both benefit equally. Show your calculations.
A – fixed: 3.3 per cent; floating: BBSW + 1.6 per cent;
B – fixed: 5.1 per cent; floating: BBSW + 2 per cent.
A. Structure a swap so that the two companies share the benefit equally.
B. How would the swap rates change if company A negotiates to get 0.2% more than company B?
Review question 3
What arbitrage strategy can be used if the following rates are observed in the market and what will be the risk free profit amount?
• USD1 = AUD 1.3000
• USD1 = SGD 1.3000
• AUD1 = SGD 1.1800
Review question 4
Given the following rates, what arbitrage profit may be made with respect to the Australian dollar?
• USD 1 = AUD 1.70
• USD 1 = SGD 1.70
• AUD 1 = SGD 0.96
need asap please help