Question

Question 4 a. Suppose a firm enters a fixed for floating interest rate swap with a swap dealer. With example, illustrate the cash flow that will occur as a result o the swap (13 marks) Sabah Top Berhad currently has 330,000 shares outstanding with market value of RM64 per share. Assuming no market imperfections or tax effect exist, how much is the share price after: b. i. Sabah Top has a five-for-three share spilt? i. Sabah Top has a 15 percent share dividend? ili. Sabah Top has a RM3 cash share dividend? iv. Sabah Top has a four-for-seven reverse share split? (3 marks) (3 marks) (3 marks) (3 marks TOTAL 25 MARK
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Q4

B

The solution is provided below for your reference

i

=64*3/5=38.4

ii

=64/1.15=55.65217

iii

=64-3=61

iv

=64*7/4=112

Add a comment
Know the answer?
Add Answer to:
Question 4 a. Suppose a firm enters a fixed for floating interest rate swap with a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • INTEREST RATE SWAP HW PROBLEM Firm A can issue fixed-rate debt e-40:0 and floating rate debt...

    INTEREST RATE SWAP HW PROBLEM Firm A can issue fixed-rate debt e-40:0 and floating rate debt e LIBOR+ 20 bps. Firm B, less credit worthy, can issue fixed-rate debt @ 12.0% and floating rate debt @ LIBOR + 60 bps. Firm A wishes to issue floating rate debt and firm B wishes to issue fixed rate debt. Take the part of a swap intermediary and create a fixed floating interest rate swap with terms that benefit all three partiesfirm A,...

  • a) ABC Ltd is interested to sell an existing fixed-for-floating interest rate swap to one of...

    a) ABC Ltd is interested to sell an existing fixed-for-floating interest rate swap to one of its corporate clients. Under the existing swap, ABC Ltd pays 10% pa and receive 3-month LIBOR on a $10 million principal. Cash flows are exchanged every quarter. The swap has a remaining life of 16 months. Data shows that the 3-month LIBOR rate 1 month ago was 11.8% pa; 2 months’ ago it was 12% pa; 3 months’ ago it was 12.2% pa and...

  • 1 Netflix Co. that has been floating rate notes now believes that interese rise I decides...

    1 Netflix Co. that has been floating rate notes now believes that interese rise I decides to protect itself nainst this possibility by entering into an in rate swap with a dealer. In this swap, the notional principal is $80 million and the company will pay a fixed rate of 5.5 percent and receive LIBOR. The current LIROU is 5 percent. Calculate the first payment and indicate which party (Netflix or the dealer) prys which Assume that payments will be...

  • PLEASE BOLD THE FINAL ANSWERS AND MAKE THEM VISIBLE. I GIVE THUMBS UP Mill Creek Corporation...

    PLEASE BOLD THE FINAL ANSWERS AND MAKE THEM VISIBLE. I GIVE THUMBS UP Mill Creek Corporation (MCC) currently has 450,000 shares of stock outstanding that sell for $90 per share. Assuming no market imperfections or tax effects exist, what will the share price be after: a. MCC has a four-for-three stock split? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) New share price           $  per share b. MCC has...

  • Question 3 TIP TOP Berhad has RM50 million in total assets. The firm is considering increasing...

    Question 3 TIP TOP Berhad has RM50 million in total assets. The firm is considering increasing its non-current assets at the end of the year by RM15 million. The company plans to finance 40% of the expansion with debt and the remaining 60% with equity capital. Bond financing will be at a 10% rate and will be sold at par value. The common stock is currently selling at RM50 per share. The flotation cost for issuing common stock will be...

  • ALL PART OF SINGLE QUESTION Historical growth rate estimation Dividend $2.00 $2.50 $2.90 $3.20 $3.60 a....

    ALL PART OF SINGLE QUESTION Historical growth rate estimation Dividend $2.00 $2.50 $2.90 $3.20 $3.60 a. What is the compound growth rate of dividends based on the last five years of dividends data? (2 marks) Dividend $2.00 $2.50 $2.90 $3.20 $3.60 b. Calculate the year-to-year growth rates in dividends. (2 marks) There are growth periods c. What is the average year-to-year dividend growth rate? (1 mark) d. ABC has a retention ratio of 0.75 and a historical return on equity...

  • SECTION A (40 marks): Answer ALL Questions in this section. QUESTION ONE a) Aseda Ltd incurred...

    SECTION A (40 marks): Answer ALL Questions in this section. QUESTION ONE a) Aseda Ltd incurred the following cost in its manufacturing operations GH¢ Cost of material purchase 20,000 Import duties 400 Trade discount @10% of purchase cost Cash discount 500 Irrecoverable taxes 1,000 Salary of factory plant operator 2,500 Direct labour 5,000 Salary of factory supervisor 4,000 Cost of expected production losses 800 Administrative overhead (Note) 16,000 Cost of storage of raw material for further processing 2,000 Marketing cost...

  • CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in...

    CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios: Asset utilization ratios:* a. Current ratio n. Cash turnover b. Acid-test ratio 0. Accounts receivable turnover c. Days to sell inventory p. Inventory turnover d. Collection period 4. Working capital turnover Capital structure and solvency ratios: 1. Fixed assets turnover e. Total debt to total equity s. Total assets turnover f. Long-term...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT