Answer (B) is correct. The effective interest rate is equal to the net interest expense over the usable funds. Topka’s net interest expense is equal to $47,500 ($500,000 × 9.5%). Because the bank is requiring a compensating balance of 16 , Topka’s usable funds are equal to $420,000 [$500,000 – ($500,000 × 16%)]. Thus, the effective interest rate is 11.31% ($47,500 ÷ $420,000 .
Answer (B) is correct. The hedging approach to financing involves matching maturities of debt with specific financing needs.
Answer (D) is correct. Corporate bonds are not a form of short-term credit.
(D) P = 100000 R = 6% half-yearly = 3%@ p.a. = 0.03 p.a. T = 1 yr = 2 half yrs FV = P * (1 + R)^T So, FV = 100000 * (1+0.03)^2 = 106090
(A) P = 50000 R = 18% = 18 % ÷ 12 = 0.015% monthly T = 8 yrs = 96 months EMI = P * R * [(1+R)^T/(1+R)^T-1)] EMI = 50000 * 0.015 * 1.01596 ÷ (1.01596 – 1 = 986
Total Questions: | |
Correct Answers: | |
Wrong Answers: | |
Percentage: |
|