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Question
Sahali Trading Company has issued $100 million worth of long-term bonds at a fixed rate of 9%. Sahali Trading Company then enters into an interest rate swap where it will pay LIBOR and receive a fixed 8% on a notional principal of $100 million. After all these transactions are considered, Sahali's cost of funds is __________.
A. 17%
B. LIBOR
C. LIBOR + 1%
D. LIBOR - 1%
Answer
This answer is hidden. It contains 107 characters.
Related questions
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Which of the following does not approximate the performance of a buy-and-hold portfolio strategy?
A. An equally weighted index
B. A price-weighted index
C. A value-weighted index
D. All of these options (Weights are not a factor in this situation.)
Q:
Under a "passive core" portfolio management strategy, a manager would ___________.
A. index the entire portfolio
B. index part of the portfolio and actively manage the rest
C. delegate the management of core segments of the portfolio to other managers
D. actively manage the entire portfolio
Q:
An active asset allocation strategy involves _________.
A. investing in the stock of companies that are price takers
B. maintaining approximately the same proportions of a portfolio in each asset class over time
C. varying the proportions of a portfolio in each asset class in response to changing market conditions
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Q:
An employee has an average wage of $60,000 and has worked for the firm for 25 years. The defined benefit pension plan pays retirees 2.5% of the average wage times the years of service. The employee can expect to receive _______ per year upon retirement.
A. $18,000
B. $37,500
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D. $55,250
Q:
For a bank, the difference between the interest rate charged to borrowers and the interest rate paid on liabilities is called the __________.
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Q:
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B. real; nominal
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Q:
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Q:
The asset universe is the _____________________.
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Q:
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Q:
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Q:
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What is the amount of the total contribution to his 403b if John contributes 5% of his own money?
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Q:
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Q:
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Q:
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Q:
Tilting your retirement savings plan toward your later years should only be done by investors _____________.
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Q:
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A. traditional retirement plan
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Q:
A decrease of 1% in both your tax exemption and your income tax rate would, on net, _______________.
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B. make you worse off
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Q:
A typical hedge fund incentive bonus is usually equal to ________ of investment profits beyond a predetermined benchmark index.
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Q:
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Q:
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Q:
You manage a $15 million hedge fund portfolio with beta = 1.2 and alpha = 2% per quarter. Assume the risk-free rate is 2% per quarter and the current value of the S&P 500 Index is 1,200. You want to exploit the positive alpha, but you are afraid that the stock market may fall and you want to hedge your portfolio by selling 3-month S&P 500 future contracts. The S&P contract multiplier is $250.
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D. The answer cannot be determined from the information given.