Why do arbitrage profits rarely exist in interest rate swap pricing?
What will be an ideal response?
Interest rate swaps can be equated to borrowing at a variable interest rate in order to purchase a fixed rate bond. The pricing of these instruments are set in high volume markets and correspond with bond yield curves.
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Which of the following is a tax paid by both the employee and the employer?
a. FICA tax; b. FUTA tax; c. property tax; d. SUTA tax; e. none of these.
Which auditing standards apply to private companies?
a. The AICPA Standards. b. The IASSB Standards. c. The Standards of the PCAOB. d. All of the above.
Which of the following is NOT a public relations activity?
A) speech writing B) advice and counsel to management C) creative strategy D) sponsorships E) investor relations
Trahern Baking Co. common stock sells for $32.50 per share. It expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, and its expected constant dividend growth rate is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?
A. 12.70% B. 13.37% C. 14.04% D. 14.74% E. 15.48%