fb
$20 Bonus + 25% OFF
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
loader
Add File

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Stuck on Your Question?

Get 24x7 live help from our Top Tutors. All subjects covered.

250 words

Error goes here

Students Who Viewed This Also Studied

6 Pages
MOD001115 Business Management and strategic management

The company to be analyzed is HOVID Bhd and the benchmarking company are Y.S.P Southeast Asia Holding Bhd, Pharmaniaga , Kontra Webist request you to send me both spreadsheet while the assignment is c ...

Course

MOD001115

Type

Programming

Subject

Finance

University

Universiti Teknologi Malaysia

4 Pages
Management

Scenario Last night there was a huge party at the New York Stock Exchange honoring the top 25 multinational corporations (where 40% of a company's workforce is stationed outside its headquarters).The ...

Type

Assignment

Subject

Finance

9 Pages
FIN 650 Managerial Finance

Tasks: Part ATo live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account toda ...

Course

FIN 650

Type

Home Work

Subject

Finance

University

Grand Canyon University

27 Pages
FIN305 Cash Flow and investments

Task: The basic idea of capital budgeting is simple: 1) find a project that you think might be profitable and will be worth more than it costs, 2) determine how much it will cost to finance this proj ...

Course

FIN305

Type

Home Work

Subject

Finance

University

California State University San Bernardino

BUS308- Credit and Lending Decisions

Question

Answered

Question 1

Consider the coefficients of Altman's Z-score. 

On May 15, 2020, Tsingpre Airlines has applied for loan from your bank. After calculating Altman Z for Tsingpre Airlines you note that it exceeds the Altman Z threshold and recommend approval of the loan request. Unfortunately, your chief credit manager rejects the loan and suggests that you have omitted one of the 5Cs of credit. Present arguments on why the credit manager has disputed your decision.

Question 2

What is underinvestment moral hazard? Explain how collateral can reduce this moral hazard.

Question 3

In Question 1, we discussed Altman Z that measures a firm’s creditworthiness:

An index that measures ability to obtain external financing is the KZ Index. The KZ-Index (Kaplan-Zingales Index) is a relative measurement of reliance on external financing. Companies with a higher KZ-Index scores are more likely to experience difficulties when financial conditions tighten since they may have difficulty financing their ongoing operations.

The KZ-Index (Kaplan-Zingales Index) is described in Lamont, Polk and Saa-Requejo (2001)

Where:

Cash Flows = (Income Before Extraordinary Itemst + Total Depreciation and Amortizationt), K = Property, Plant and Equipmentt-1, Q = (Market Capitalizationt + Total Shareholder's Equityt - Book Value of Common Equityt – Deferred Tax Assetst) / Total Shareholder's Equityt, Debt = Total Long Term Debtt + Notes Payablet + Current Portion of Long Term Debtt ,Dividends = Total Cash Dividends Paidt (common and preferred) and Cash = Cash and Short-Term Investmentst. The ratio has been slightly modified by reducing the number of decimal places.

Your bank manager has asked you if it is possible to combine Altman Z and KZ index to permit improved decisions on whether a firm should have their loans approved (or rejected). You have created the figure below

Given the four quadrants (Quadrants 1 to Quadrant 4) develop justifications for either approving or rejecting a loan from each quadrant.

Please ensure that you use the spaces provided in the next page for your answer.

Question 4

a.The Bank of Tinytown has two loans that have the following characteristics: Loan A equals $250 million with an expected return of 5 per cent and a standard deviation of returns of 5 per cent. The size, expected return and standard deviation of returns for loan B are $500 million, 8 per cent and 7.5 per cent, respectively. If the covariance between A and B is

0.0035, what are the expected return and standard deviation of this portfolio? Given the covariance can the calculation be simplified? What will the risk of the portfolio be, given the simplification?

b.Briefly describe any way(s) that the risk of this portfolio may be reduced? Be specific.

Question 5

Ms Josephine Brown would like to borrow $280 from your bank to invest in a project that will pay off one period from now. The project is risky and its payoff is dependent on Ms Brown’s effort in managing it. If the project is successful, it pays off $670, but if it is unsuccessful it pays off nothing. Ms Brown can choose two levels of effort, high or low. If she chooses high effort, she suffers a personal cost of $70, but there is no personal cost associated with choosing low effort. With the two effort levels the probability that the project will succeed is 0.7 and 0.4 for the high and low effort levels respectively. The riskless rate is 5%. You consider designing a loan contract that involves the use of collateral. Ms Brown is willing to provide a personal guarantee that will result in collateral of $275 being available in case of project default. Assume that you cannot observe Ms Brown’s effort.

Determine the interest rates for the secured and for the unsecured loan? Determine if a Nash equilibrium will occur.

Question 6

A bank is planning to make a loan of $40,000,000 to CIQ Maxigram a firm in the steel industry. It expects to charge a servicing fee of 20 basis points. The cost of funds - the risk adjusted return on capital (RAROC benchmark) for the bank is 7.2 percent. Assume that bank has estimated the maximum change in the risk premium on the steel manufacturing sector to be approximately 1.25% based on two years of historical data. The current market interest rate for loans in this sector is 7.5%.

CIQ Maxigram presents two loans to the bank:

Loan A: Bullet loan – interest only loan with principal repaid at the end of the loan life with duration of 6.75 years and a maturity of 10 years.

Loan B: Amortised loan – interest and principal with duration of 4.8 years and a maturity of 10 years.

Using the appropriate model determine whether the bank should make the loan?

BUS308- Credit and Lending Decisions

Answer in Detail

Solved by qualified expert

Get Access to This Answer

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Hac habitasse platea dictumst vestibulum rhoncus est pellentesque. Amet dictum sit amet justo donec enim diam vulputate ut. Neque convallis a cras semper auctor neque vitae. Elit at imperdiet dui accumsan. Nisl condimentum id venenatis a condimentum vitae sapien pellentesque. Imperdiet massa tincidunt nunc pulvinar sapien et ligula. Malesuada fames ac turpis egestas maecenas pharetra convallis posuere. Et ultrices neque ornare aenean euismod. Suscipit tellus mauris a diam maecenas sed enim. Potenti nullam ac tortor vitae purus faucibus ornare. Morbi tristique senectus et netus et malesuada. Morbi tristique senectus et netus et malesuada. Tellus pellentesque eu tincidunt tortor aliquam. Sit amet purus gravida quis blandit. Nec feugiat in fermentum posuere urna. Vel orci porta non pulvinar neque laoreet suspendisse interdum. Ultricies tristique nulla aliquet enim tortor at auctor urna. Orci sagittis eu volutpat odio facilisis mauris sit amet.

Tellus molestie nunc non blandit massa enim nec dui. Tellus molestie nunc non blandit massa enim nec dui. Ac tortor vitae purus faucibus ornare suspendisse sed nisi. Pharetra et ultrices neque ornare aenean euismod. Pretium viverra suspendisse potenti nullam ac tortor vitae. Morbi quis commodo odio aenean sed. At consectetur lorem donec massa sapien faucibus et. Nisi quis eleifend quam adipiscing vitae proin sagittis nisl rhoncus. Duis at tellus at urna condimentum mattis pellentesque. Vivamus at augue eget arcu dictum varius duis at. Justo donec enim diam vulputate ut. Blandit libero volutpat sed cras ornare arcu. Ac felis donec et odio pellentesque diam volutpat commodo. Convallis a cras semper auctor neque. Tempus iaculis urna id volutpat lacus. Tortor consequat id porta nibh.

25 More Pages to Come in This Document. Get access to the complete answer.

MyAssignmenthelp.com is committed to provide top-notch quality academic assistance at affordable price. To help students from different backgrounds, we have hired more than 3000 experts. Owing to in-depth knowledge in their respective subjects, they effectively provide geography assignment help, Physics assignment help, Strategic assignment help, history assignment help, art architecture assignment help and much more.

More BUS308 BUS308- Credit and Lending Decisions: Questions & Answers

Q
icon

We aren't endorsed by this University

The company to be analyzed is HOVID Bhd and the benchmarking company are Y.S.P Southeast Asia Holding Bhd, Pharmaniaga , Kontra Webist request you to send me both spreadsheet while the assignment is completed. Assignment component: 1.0 Introduction 1.1 Objectives of study 1.2 Background info – ...

View Answer
Q

Scenario Last night there was a huge party at the New York Stock Exchange honoring the top 25 multinational corporations (where 40% of a company's workforce is stationed outside its headquarters).The event was put on by the Great Place to Work Institute, which determined the list by surveying 2.5 mi ...

View Answer
Q
icon

We aren't endorsed by this University

Tasks: Part ATo live comfortably in retirement, you decide you will need to save $2 million by the time you are 65 (you are 30 years old today). You will start a new retirement savings account today and contribute the same amount of money on every birthday up to and including your 65th birthday. ...

View Answer
Q
icon

We aren't endorsed by this University

Task: The basic idea of capital budgeting is simple: 1) find a project that you think might be profitable and will be worth more than it costs, 2) determine how much it will cost to finance this project (WACC calculation) this is the material in Chapter 11, 3) estimate the net cash flows from the p ...

View Answer

Content Removal Request

If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the content removal request.

Choose Our Best Expert to Help You

expert
student rating student rating student rating student rating student rating
Jefferson Knowles

I am a visiting professor at University of Notre Dame.

200 - Completed Orders

Hire Me
expert
student rating student rating student rating student rating student rating
Andre Beasley

Master of Clinical Pharmacy

295 - Completed Orders

Hire Me
expert
student rating student rating student rating student rating student rating
James Alderson

PhD in Statistics

619 - Completed Orders

Hire Me
expert
student rating student rating student rating student rating student rating
Maddox Dowling

PhD in Human Resource Management

161 - Completed Orders

Hire Me

Still in Two Minds? The Proof is in Numbers!

33845 Genuine Reviews With a Rating of 4.9/5.

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Assignment: 16 Pages, Deadline: 16 days

Very supporting and helpful, I am happy to express that the assignment and writing is very good and helped me to achieve good achievement in study.

flag User ID: 4***58 Malaysia

student rating student rating student rating student rating student rating
02 Dec 2021

Medical

Programming: 4 Pages, Deadline: 2 days

they do so much good, the grades go up and professor are so happy! would definitely recommend

flag User ID: 7***77 United States

student rating student rating student rating student rating student rating
02 Dec 2021

Medical

Course Work: 6.4 Pages, Deadline: 3 days

Very satisfied will definitely go back for more help. Delivered before the deadline

flag User ID: 7***77 United States

student rating student rating student rating student rating student rating
02 Dec 2021

HRM

Assignment: 12 Pages, Deadline: 1 day

Get the good result. And the expert on time to submit it. The suggestion quite good, but if more real life example is will be better and will still us ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Organizational Behavior

Essay: 12 Pages, Deadline: 5 days

Get the good result. And the grade also satisfaction grade. The expert on time to send the assignment, if write more suggestion and real example will ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

HRM

Assignment: 10 Pages, Deadline: 5 days

Got the great result and satisfaction grade. Thank you very much. Will still use this service. The expert carefully to write and suggestion, but if m ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Essay: 2 Pages, Deadline: 2 days

The result great and satisfaction. Will still use this service and recommend to my classmates and friends. But if more life examples and suggestion wi ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Assignment: 1 Page, Deadline: 7 days

Excellent work done by the experts. Even they charges less than anyone with the best work. My instructor appreciate me for my work infront of the whol ...

flag User ID: 8***10 Canada

student rating student rating student rating student rating student rating
02 Dec 2021

Project Management

Essay: 1 Page, Deadline: 15 hours

I had to make a couple of edits other than that the assignment was written well.

flag User ID: 7***16 United States

student rating student rating student rating student rating student rating
01 Dec 2021

Marketing

Home Work: 12 Pages, Deadline: 2 days

he did a great job, I receive an A for this exam... I will use this service again.

flag User ID: 7***36 France

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Assignment: 16 Pages, Deadline: 16 days

Very supporting and helpful, I am happy to express that the assignment and writing is very good and helped me to achieve good achievement in study.

flag User ID: 4***58 Malaysia

student rating student rating student rating student rating student rating
02 Dec 2021

Medical

Programming: 4 Pages, Deadline: 2 days

they do so much good, the grades go up and professor are so happy! would definitely recommend

flag User ID: 7***77 United States

student rating student rating student rating student rating student rating
02 Dec 2021

Medical

Course Work: 6.4 Pages, Deadline: 3 days

Very satisfied will definitely go back for more help. Delivered before the deadline

flag User ID: 7***77 United States

student rating student rating student rating student rating student rating
02 Dec 2021

HRM

Assignment: 12 Pages, Deadline: 1 day

Get the good result. And the expert on time to submit it. The suggestion quite good, but if more real life example is will be better and will still us ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Organizational Behavior

Essay: 12 Pages, Deadline: 5 days

Get the good result. And the grade also satisfaction grade. The expert on time to send the assignment, if write more suggestion and real example will ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

HRM

Assignment: 10 Pages, Deadline: 5 days

Got the great result and satisfaction grade. Thank you very much. Will still use this service. The expert carefully to write and suggestion, but if m ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Essay: 2 Pages, Deadline: 2 days

The result great and satisfaction. Will still use this service and recommend to my classmates and friends. But if more life examples and suggestion wi ...

flag User ID: 4***0 Central District, Hong Kong

student rating student rating student rating student rating student rating
02 Dec 2021

Management

Assignment: 1 Page, Deadline: 7 days

Excellent work done by the experts. Even they charges less than anyone with the best work. My instructor appreciate me for my work infront of the whol ...

flag User ID: 8***10 Canada

student rating student rating student rating student rating student rating
02 Dec 2021

Project Management

Essay: 1 Page, Deadline: 15 hours

I had to make a couple of edits other than that the assignment was written well.

flag User ID: 7***16 United States

student rating student rating student rating student rating student rating
01 Dec 2021

Marketing

Home Work: 12 Pages, Deadline: 2 days

he did a great job, I receive an A for this exam... I will use this service again.

flag User ID: 7***36 France

5% Cashback

On APP - grab it while it lasts!

Download app now

*Offer eligible for first 3 orders ordered through app!

ribbon
callback request mobile
Have any Query?