Suppose that an ABS is created from a portfolio of subprime mortgages with the following allocation of the principal to tranches: senior 80%, mezzanine 10%, and equity 10%. Losses on the mortgage portfolio prove to be 16%
What, as a percent of tranche principal, are losses on the mezzanine tranche of the ABS
A. 50%
B. 60%
C. 80%
D. 100%
B
10% out of the 16% loss is absorbed by the equity tranche. The remaining 6% is absorbed by the mezzanine tranche. The total size of the mezzanine tranche is 10%. It is therefore 60% wiped out.
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Pacific Green Company is considering buying a unique bar-coding machine to help them track their plant inventory. They evaluated the payback period and accounting rate of return and selected the project for further evaluation. Relevant information on the machine is repeated as follows:Acquisition cost = $48,000Expected salvage value = $0Expected annual cash inflow benefits = $13,000 per year for 5 yearsExpected useful life = 5 yearsRequired: Compute the net present value of the project assuming a discount rate of 16%. Use EXCEL to compute the internal rate of return. Advise PGC on the best course of action with respect to the investment.
What will be an ideal response?
Under which of the following types of misrepresentation is the innocent party usually not able
to rescind a contract? A) Silence as misrepresentation B) Innocent misrepresentation C) Fraud in the inception D) Misrepresentation of law E) Fraud in the inducement
Which of the following statements about manufacturers is FALSE?
A. The greatest growth in manufacturing has occurred in countries where labor is cheapest. B. Most U.S. factories operate in large metropolitan areas. C. The majority of U.S. manufacturers are small, with three-quarters having fewer than 20 employees. D. NAICS codes help marketers classify different types of manufacturing businesses. E. Manufacturing output in the United States is shrinking.
The drawee of a check is always the
a. person who will receive the money. b. holder of the check. c. bank. d. depositor.