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  • Solved Suppose Viacom Can Issue 100 000 000 of Debt at An Aic

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    M Bilal Saleem
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    Viacom can issue $100 million of debt at 9.42% AIC, while Gaz de France can issue the same amount at 10.11% AIC. If Viacom issues euro-denominated bonds equivalent to $100 million, its AIC will be 8.27%. UBS is quoting swap rates of 8.75-8.85% bid-offered for dollars and 5.25-5.35% for Swiss francs. You want to swap CHF25 million debt for fixed-rate dollar debt. The Second Bank of Chicago offers dollar rates at 7.95% Treasury yields plus 55 basis points in exchange for dollar LIBOR. Pfizer considers swapping $10 million

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    Solved Suppose Viacom Can Issue 100 000 000 of Debt at an Aic

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    Viacom can issue $100 million of debt at 9.42% AIC, while Gaz de France can issue the same amount at 10.11% AIC. If Viacom issues euro-denominated bonds equivalent to $100 million, its AIC will be 8.27%. UBS is quoting swap rates of 8.75-8.85% bid-offered for dollars and 5.25-5.35% for Swiss francs. You want to swap CHF25 million debt for fixed-rate dollar debt. The Second Bank of Chicago offers dollar rates at 7.95% Treasury yields plus 55 basis points in exchange for dollar LIBOR. Pfizer considers swapping $10 million

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    © All Rights Reserved
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    14 views1 page

    Solved Suppose Viacom Can Issue 100 000 000 of Debt at An Aic

    Uploaded by

    M Bilal Saleem
    Viacom can issue $100 million of debt at 9.42% AIC, while Gaz de France can issue the same amount at 10.11% AIC. If Viacom issues euro-denominated bonds equivalent to $100 million, its AIC will be 8.27%. UBS is quoting swap rates of 8.75-8.85% bid-offered for dollars and 5.25-5.35% for Swiss francs. You want to swap CHF25 million debt for fixed-rate dollar debt. The Second Bank of Chicago offers dollar rates at 7.95% Treasury yields plus 55 basis points in exchange for dollar LIBOR. Pfizer considers swapping $10 million

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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    (SOLVED) Suppose Viacom can issue 100 000 000 of debt

    at an AIC
    Suppose Viacom can issue $100,000,000 of debt at an AIC of 9.42%, whereas Gaz de France
    can issue $100,000,000 of debt at an AIC of 10.11%. Suppose that the exchange rate is
    $1.35/€. If Viacom issues euro-denominated bonds equivalent to $100,000,000, its AIC will be
    8.27%, whereas if Gaz de […]

    The swap desk at UBS is quoting the following rates on 5-year swaps versus 6-month dollar
    LIBOR:U.S. Dollars: ……. 8.75% bid and 8.85% offeredSwiss Francs: ……. 5.25% bid and 5.35%
    offeredYou would like to swap out of Swiss franc debt with a principal of CHF25,000,000 and
    into fixed-rate dollar debt. […]

    At the 7-year maturity, U.S. Treasury bonds’ yield to maturity is 7.95% p.a. The Second Bank of
    Chicago states that it will make fixed interest rate payments on dollars at the yield on Treasury
    bonds plus 55 basis points in exchange for receiving dollar LIBOR, and it will receive fixed […]

    Pfizer is a U.S. firm with considerable euro assets. It is considering entering into a currency
    swap involving $10 million of its dollar debt for an equivalent amount of euro debt. Suppose the
    maturity of the swap is 8 years, and the interest rate on Pfizer’s outstanding 8-year dollar debt
    […]

    GET ANSWER- https://accanswer.com/downloads/page/3206/

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    SEE SOLUTION>> https://accanswer.com/downloads/page/3206/

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