1. ANGLO-GOLD ASHANTI issues 90-day commercial paper with par value of GHS10,000,000. It expects to sell the commercial paper for GHS 9,600,000. What is the yield of this commercial paper?

2. Banks assets bring in income to the bank. If bank ABC has rate sensitive assets worth GHS50 million and interest rates increase by 1%, how much will the bank’s income increase. Payments are made on banks liabilities. Asuming bank ABC has rate sensitive liabilities worth GHS75 million, how much will payments on the liabilities increase if there is 1% increase in interest rate. Measure the GAP. How much will ABC’s income change by the 1% increase in interest rate. If interest rate had fallen by 1%, how much will be the change in ABC’s income.

3. A Ghanaian bank has assets of GHS100 million and average duration of the assets of 2.7 years. The bank has liabilities of GHS95million and average duration of the liabilities of 1.03 years. If interest rate should increase from 10% to 15%, calculate the change in the (a) market value of assets (b) the market value of the liabilities (c) net worth of the bank

4. Negotiable certificates of deposits (NCDs) are interest-bearing deposits in financial institutions which may be sold before maturity. Assume an investor invested GHS 50,000 in 60-day NCDs and decided to liquidate the investment on the 45^th day. Calculate the total interest and principal paid by the bank to the investor. Assume a buy and sell interest rate of 8.0% p.a and 9.5% p.a. for the 60-day NCD.

5. Assume the following HFC corporate bond trades on the GSE has a face value of GH¢1000

Bond Current yield Volume Close Net change

HFC 9s29 ? 500 105½ -¼

1. How much does this bond pay every six months in Ghana cedis?
2. What is the close quote in cedis?
3. In what year does the bond mature?
4. Calculate the current yield of the bond

6. Assume interest rate on a 3-year treasury note is 12 percent, and on a 1-year note is 10 percent. Under the expectations theory, what would be the implied rate on a 2-year treasury note one year from now?

7. Assume SCB is considering an equity issue to finance a new ATM equipment. SCB needs GHS15 million for this equipment. If direct costs are estimated at 8 percent of the amount to be raised,
   1. How large should the issue be?
   2. What is the cedi amount of the flotation cost?

8. Assume the Super Paper Products Company (SPPC) of Ghana has 3 million shares outstanding. Assume further that its stock is now selling for GHS 40 per share. The company wants to raise GHS 20 million for a new toilet-roll making plant. The firm is considering a rights offering of GHS 25 per share.
   1. Calculate the value of a right.
   2. What is the ex-rights price?

9. If a corporate investor purchases a 91-day treasury bill with a maturity value of GHS5,000,000.00 for GHS4,780,000.00. If the investor sells the t/bill for GHS4,930,000 after 65 days, what is the annualized yield of this t/bill? (Assume 365 days in a year wherever necessary).

10. The ABC company has arranged a repurchase agreement in which it is purchasing securities for GHS4.62 million and has agreed to sell them back for GHS4.75 million at the end of 60days. Calculate the repo yield.

Use the information below on CAL Bank NCD rates to answer questions the questions following

Buy % pa Sell % pa

1-month (30 days) 9.0 11.30

2-months (60 days) 9.0 11.35

3-months (91days) 9.0 11.40

11. If an investor invested in the one-month (30days) NCDs with GHS125 million, how much will be his total payment from CAL BANK at the end of the one-month period?

12. If another investor invested GHS500 million in the three-month NCD and for some unforeseen circumstances this investor decided to liquidate his investment on day 52, calculate the total amount that CAL Bank should pay him.

13. An investor bought the shares of a mutual fund for GHS2000 per share. At the end of the year the fund distributed a dividend of GHS60 per share. After the distribution, the net asset value of a share of the mutual fund came to GHS2240.What is the return on the investment to the investor in percentage terms?

14. Assume the interest rate on a three-year treasury note in Ghana is 20%, and that on a one-year note is 16%. Using the Expectations Theory, calculate the implied rate on a two-year treasury note one year from now.

15. A young couple has just purchased a 3-bedroom house for GHS400, million payable in twenty years. The couple has opted for the traditional mortgage design i.e., fixed rate, level-payment, fully amortized mortgage loan. The mortgage rate is 15% per annum with monthly payments. You have been asked to prepare an amortization schedule for this couple for the first ten months. The titles for the schedule include; month; beginning mortgage balance; monthly mortgage payment; interest for month; principal repayment and ending mortgage balance.

Answer rating: 100% (QA)

1 The yield of the commercial paper issued by Anglogold Ashanti is 1664 2 For a 1 increase in interest rate the gap in the income will be 025 million For a 1 decrease in interest rate the gap in the i... View the full answer