1- Al-Ahli Bank has issued a one-year commitment loan of BD 7 million at an interest rate of 5%. The Bank requires a compensating balance of 15% on loan given. The bank must maintain 5% reserve requirement on the compensating balance. The customer is expected to draw down 80% of the commitment. The total fees collected (up-front and Back end) from the customer are 12‚280. What is the expected rate of return of this loan for the Bank? Answer: Loan given = 7m x 80% = $5‚600‚000 Compensating
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I. INTRODUCTION I. PROBLEM STATEMENT Dan Barnes‚ financial manager of Ski Equipment Inc. (SKI) is anxious that the Company’s founder recently sold his 51% controlling block of stock to Kent Koren‚ who is a big fan of EVA (Economic Value Added). Koren rewards managers handsomely if they create value‚ but those whose operations produce negative EVAs are soon looking for work. Koren frequently points out that if a company can generate its current level of sales with fewer assets‚ it would need
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much as possible. Charging your purchases with a credit card instead of paying in cash or with a debit card will mean that you have to pay interest charges‚ especially when you cannot pay off the balance each month. Make a habit of paying for purchases under RM50 with cash. Making late credit payments can throw your account into default and triple your interest rate. If you are mailing payments‚ send them seven to 10 business days in advance. Better yet‚ sign up for online bill payment so that the
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1.1 Objective of the study: The objective of the assignment is to familiarize students with the real business situation‚ to compare them with the business theories & at last stage make a report on assign task. The study has been undertaken with the following objectives: To analysis the pros and cons of the conventional ideas about credit operation of a Bank. To have better orientation on credit management activities specially credit policy and practices‚ credit appraisal‚ credit-processing steps
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individual to borrow funds often at a point of sale. It is important to note that credit cards charge interest and are basically use for short-term financing. Moreover‚ the interests charged on credits cards are enacted usually one month after purchasing is made and borrowing limits are pre-set. This is with regard to the individual`s card rating. Significantly‚ credit cards contain a higher interest rate that is about 19% per year than majority of the consumer lines or loans of credit. Consequently
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irregular payment Prepare an amortization schedule Nature of Amortization Amortization Refers to the process of liquidating by installment the payments (at a regular interval) of a loan or debt‚ including the interest charges By the process of amortization‚ the principal and the interests are reduced by a series of installment payments made either at the beginning or at the end of the payment interval Implies that the amount regularly paid to discharge an obligation is of equal size Note: in
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espoused by Adam Smith (1723–1790) and J. M. Keynes (1883–1946): • Smith suggested (Wealth of Nations‚ 1776) that a free economy driven by market forces and free of government intervention is best. • Keynes suggested (General Theory of Employment‚ Interest‚ and Money‚ 1936) that government intervention is important‚ particularly in times of economic stagnation and inflation. His views had a strong influence on actions taken by President Roosevelt in formulating “The New Deal” of the 1930s. 357 358
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CHAPTER 9 RISK MANAGEMENT: ASSET-BACKED SECURITIES‚ LOAN SALES‚ CREDIT STANDBYS‚ AND CREDIT DERIVATIVES Goal of This Chapter: The purpose of this chapter is to learn about some of the newer financial instruments that financial institutions have used in recent years to help reduce the risk exposure of their institutions and‚ in some cases‚ to aid in generating new sources of fee income and in raising new funds to make loans and investments. Key Topics in This Chapter •
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the market to have crossed Rs550bn by end-FY11 as specialized NBFCs Muthoot Finance and Manappuram combine have grown their book by Rs130bn+ during the year. Share of the organized pie has been increasing rapidly due to significantly lower rate of interest charged‚ higher LTV offered and perceived safety of the ornaments. With penetration still negligible at 11.5%‚ the organized market would continue to witness strong growth. Specialized NBFCs better placed than banks Amongst organized players‚ specialized
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Answers Fundamentals Level – Skills Module‚ Paper F9 Financial Management 1 (a) December 2007 Answers (i) Price/earnings ratio method valuation Earnings per share of Danoca Co = 40c Average sector price/earnings ratio = 10 Implied value of ordinary share of Danoca Co = 40 x 10 = $4·00 Number of ordinary shares = 5 million Value of Danoca Co = 4·00 x 5m = $20 million (ii) Dividend growth model Earnings per share of Danoca Co = 40c Proposed payout ratio = 60% Proposed
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