Finance Answers

How did liquidity risk contributed to the financial crisis of 2008?

Did liquidity risk contributed to the financial crisis of 2008?

1.Ten years ago Diana Torres wrote what has become the leading Tort textbook. She has been receiving royalties based on revenues reported by the publisher. These revenues started at £1,700 in the first year, and grew steadily by 4.9% per year. Her royalty rate is 18% of revenue. Recently, she hired an auditor who discovered that the publisher had been underreporting revenues. The book had actually earned 10% more in revenues than had been reported on her royalty statements. Assuming the publisher pays an interest rate of 4.7% on missed payments, how much money does the publisher owe Diana?

Briefly discuss how the Banking Act Cap 488 (Laws of Kenya) protects a customer’s deposits.

Question 1 

Ford Motor has decided to borrow money by issuing perpetual bonds with a coupon rate of 7%, payable annually, and a par value of $1,000. The 1-year interest rate is 7%. Next year, there is a 35% probability that interest rates will increases to 9% and a 65% probability that they will fall to 6%.

a. What will the market value of these bonds be if they are noncallable?

b. If the company decides instead to make the bonds callable in one year, what coupon will be demanded by the bondholders for the bonds to sell at par? Assume that the bonds will be called if interest rates fall and that the call premium is equal to the annual coupon.

c. What will be the value of the call provision to the company?

How does the search for market niches by British firm help illustrate the theory of comparative advantage?

How does EU manager’s desire to buy domestic products illustrate the importance of consumer taste in international markets?

Explain the types of risks in 2008 financial crisis?

Discuss the main causes of the financial crisis of 2008? Identify the main risk that contributed to this crisis

A $100,000 3% Ontario hydro bond matures November 30, 2016. The current date is November 20, 2013. The price you would pay is 98.9 to buy it. Are market interest rates are higher or lower than 3%?