|National University of Singapore (NUS)
|FIN3101A/FIN3701A: Corporate Finance
FIN3101A/FIN3701A: Corporate Finance Assignment, NUS, Singapore Calculate the convexity for a three-year 5.5% coupon rate with a face value of $500,000 loan with amortized payments
QUESTION 1 a
Use this balance sheet information to answer the following questions:
|Financial Institution (FI) Balance Sheet (Amount in millions, Duration in years)
The bank is considering approving a special loan with the following characteristics:
Loan A: The loan that has 5 years to maturity and has bond-like repayments.
Loan B: The loan has repayments of $145.808 million at the end of year 1, $603.695 million at the end of year 4, and $33.755 million at the end of year 6.
Both loans are trading at par and the yield to maturity is 5.5 percent per annum.
Select the loan that the bank should approve. Please provide justification. Assume that both loans have similar default risks.
Assuming a flat yield curve and a parallel shift of the entire yield curve of 150-basis points upward what the impact on the FI’s market value of equity is?
Calculate the convexity for a three-year 5.5% coupon rate with a face value of $500,000 loan with amortized payments.
Use this information to determine the impact on the market value of the amortized loan if the entire yield curve shifts 150-basis points upward.
What is the usefulness of convexity when duration is available as a measure of interest rate risk? What is the practical implication for the three-year loan in this example?
The figure below shows the federal funds rate for the period 2012 to 2022. The federal funds rate is the interest rate banks charge each other to borrow or lend excess reserves overnight.
As can be seen, the rate is rapidly rising. What impact does this have on commercial banks’ net interest margin? Be specific by considering the banks’ assets, liabilities, and equity.
What is a maturity bucket in the repricing model? Why is the length of time selected for repricing assets and liabilities important when using the repricing model? How does this impact runoff?
QUESTION 3a (i)
Following are current prices for pure discount bonds with face value of $1,250 of different maturities as of 1 January 2022. Calculate the spot interest rates for each bond.
QUESTION 3a (ii)
Assume the expectations theory is valid. Based on your results in part (a), determine the spot 1-year, 2-year, and 3-year rates expected 1 year later on 1 January 2023.
In corporate finance, the leverage ratio can be calculated by dividing capital by book value of assets. How have regulators altered this ratio to determine the capital adequacy requirements for banks or authorized depository institutions?
Explain the arguments for and against market-value accounting. In your answer ensure that you clearly explain “real losses” and “paper losses” and the role of moral hazard in the application of market value accounting. Use a simplified bank balance sheet to illustrate your response. How would the impact of COVID-19 influence your answer?
A financial institution has the following balance:
|Balance Sheet (in billion)
In 2022 a flood increased liquidity needs of a bank servicing the affected community as depositors withdrew deposits to the value of $20 billion.
|Withdrawal of Deposits
Would you recommend this bank rely more on asset liquidity or liability liquidity to meet these additional requirements? Give reasons. Show how you would manage the bank’s liquidity position.
Buy Custom Answer of This Assessment & Raise Your Grades
Embark on a journey of financial excellence with our expert assistance in FIN3101A/FIN3701A: Corporate Finance at My Assignment Help SG Gain a deep understanding of corporate finance principles, analyze investment strategies, and excel in your assignments. Our experienced team provides comprehensive support and dissertation writing service in Singapore.
Tags:- Finance Management Assignment NUS
- FMT315: Some of the broad strategies to optimize energy efficiency in existing building involve: Sustainable Buildings Assignment, SUSS, Singapore
- FMT315: There are several forms of renewable energy sources that are available for the built environment: Sustainable Buildings Assignment, SUSS, Singapore
- FMT315: “A well-designed building uses the right combination of both passive and active design strategies: Sustainable Buildings Assignment, SUSS, Singapore
- ECE302: Compare how the Early Years Development Framework, 2023 and the Nurturing: Children’s Social and Emotional Learning Assignment, SUSS, Singapore
- ECE302 Children’s Social and Emotional Learning Assignment, SUSS, Singapore: Discuss at least THREE (3) key points that the author raised in the article with regards to children’s social:
- Case 7- Harley-Davidson, Inc. in 2018 Review-Harley-Davidson, Inc. was far from being the world’s biggest motorcycle manufacturer: Assignment, Singapore
- Sustainable Strategic Business Management Assignment, AGI, Singapore: Outline Porter’s generic strategy of differentiation and explain, using examples from the case study
- Sustainable Strategic Business Management Assignment, AGI, Singapore: Product development allows a company to modify existing products or develop
- BSP2701 Economics Assignment, NTU, Singapore: Under The Fractional Reserve Banking System, We Can Compute The Money Supply By Adding The Monetary
- PSY305 Exploring The Mind Assignment, SUSS, Singapore: The following headline was featured in the Life section of The Straits Times on 17 November 2023
UP TO 15 % DISCOUNT
Get Your Assignment Completed At Lower Prices