Finance Answers

The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company. Assess the credit risk (z-score) of a potential borrowing firm with the following financial ratios: X1 = 0.2, X2 = 0, X3 = 0.2, X4 = 0.1, X5 = 2.0

9. Shanz Enterprises has a beta of 1.28, the real risk-free rate is 2.00%, investors expect a 3.00% future inflation rate, and the market risk premium is 4.70%. What is Kollo's required rate of return?

5. Home for less Corporation's bonds have a 10-year maturity, a 6.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 4.75%, based on semiannual compounding. What is the bond’s price?

3. The common stock of Bruner Aeronautics sells for $80 a share. The stock expects to pay $2 per share next month when the annual dividend is distributed. The company has a established a pattern of increasing their dividends by 2% annually. What is the market rate of return on this stock?

The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company. Assess the credit risk (z-score) of a potential borrowing firm with the following financial ratios: X1 = 0.2, X2 = 0, X3 = 0.2, X4 = 0.1, X5 = 2.0

An institution holds 10million shares of one company and 50million ounces of a commodity. The shares are bid $89.5, offer $90.5. The commodity is bid $15 offer $15.1. What is the liquidation cost in normal markets?

A protection buyer purchases 6-year protection on a company at a default swap spread of 400bp. The face value of the protection is K1, 000,000 million. What is the premium payment per year assuming that payments are done monthly?

The company has invested $400,000,000 in stocks and $600,000,000 in bonds. Stocks has a standard of 7%, while bonds have 10%. The correlation between stocks and bonds is 0.10. Calculate the portfolio VaR (DEAR) at 99% given mean of 10%.

Calculate the 1-year expected loss of a $100 million portfolio comprising 10 B-rated issuers. Assume that the 1-year probability of default for each issuer is 6% and the average recovery value for each issuer in the event of default is 40%.

Suppose that it is determined that a $100 million portfolio could potentially lose $20 million once every 20 trading days What is the Var at 95% and 99% Confidence intervals?

Consider a portfolio of equities worth $1,000,000,000 with an expected daily return of 4% and a daily standard deviation of returns of 0.10%. Assume that all returns are normally distributed. What is the daily VaR on this portfolio at a tolerance threshold of 95%? What is the value at risk over a 27-day period?

Five customers deposit Rs. 5, 10, 15, 20 and 25 lakh in a fixed account with Islamic Bank respectively. The first three customers plan to deposit for seven years while the last two customers plan to deposit for five years. Since the fixed account is based on Mudaraba agreement, the Islamic Bank and they agreed on profit rate of 50:50 percent.
Suppose Islamic Bank earns a monthly profit of Rs. 50 lakhs by using this deposited money.

Required:
After giving a reasonable weightages to all customers, calculate the monthly profit rate of each customer.

2. The Capital structure of ABC Ltd, is as under:
Equity share capital - ₹ 100 Lacs
10% Debentures - ₹ 50 Lacs

• The sales for the year 2019 are 1.5 Lac units@ ₹ 40per unit
• Also, the variable cost per unit is 20 % of sales revenue
• ₹ 12 Lacs is the fixed operating cost.
• Assume Income tax rate as 40 %

Calculate Operating, Financial and Combined Leverage of the firm and interpret the result.