Goodrich-Rabobank Interest Rate Swap Essay -- Economics Economy Essays

Goodrich-Rabobank Interest Rate Swap 1. How large should the discount (X) be to make this an attractive deal for Rabobank? 2. How large must the annual fee (F) be to make this an attractive deal for Morgan Guaranty? 3. How small must the combination of F and X be to make this an attractive deal for B.F. Goodrich? 4. Is this an attractive deal for the savings banks? 5. Is this a deal where everyone wins? If not, who loses? Introduction: Players: Morgan Bank, Rabobank, and B.F. Goodrich, Salomon Brothers, Thrift Institutions and Saving Banks Goodrich: In early 1983, Goodrich needed $50 million to fund its ongoing financial needs. However, Goodrich was reluctant to borrow (short term debt) from its committed bank lines because of the following reasons: 1. It would lose substantial about of its remaining short term capital availability under its bank lines. 2. It would compromise its future flexibility by borrowing in the short term. Instead, it wanted to borrow for an 8 year range (or longer) at a fixed rate. However, since the general level of interest rates were pretty high, and Goodrich?s credit ratings had dropped from BBB to BBB-. Goodrich believed that it would have to pay 13% interest for a 30 year corporate debenture. Salomon Brothers had advised Goodrich that they could borrow in the US public debt market with a floating rate debt issue tied to the LIBOR, and then swap payments with Euro market bank that had raised funds in the fixed-rate Eurobond market. Note: The reason that Salomon were confident that this could be done is described as follows: 1. There was a recent deregulation of deposit markets had allowed deposit institutions to offer n... ...% - (x1+11.2%) = 1.3%-x1. 7. From (2), and (5) Rabobank saves the following amount in semiannual interest payments: LIBOR ? 1/8% - (LIBOR ?x2) = x2 ? 1/8%. 8. For this deal to occur, Rabobank, Morgan, and Goodrich must profit hence the following also must be true: a. (x1-x2)>= F where 37.5> F> 8 (footnote #2 on page 362). b. 130 ? x1> 0 i.e. 130> x1 c. X2 ? 12.5> 0 i.e. x2> 12.5 Assuming that x2 = 20 basis, and x1 = 100 basis. We can conclude the following: Goodrich pays a fixed interest of 11.2% + 1% = 12.2% a savings of 20 basis points (after transaction costs). Rabobank saves a total of 2% - 1.8% = 20 basis points. And Morgan collects 2% - 1.25% = 75 basis points in fee, in addition to the $125,000 one time fee. Note: The total savings that this deal provides as a result of the swap is: 5 + 20 + 75 = 100 basis points.

Homelessness and Vagabond Essay

Vagabonds are normally despised by the society. What happens when they are treated like an ordinary respectable human being is the main theme of this story. Introduction: The vagabond who is often chased by people is welcomed by an old man. In spite of the good nature of the old man the vagabond robs him. He later returns the money due to the good deeds and kind nature of a young lady. Summary: The vagabond sold self made rattraps. He made the rattraps with wire which he got by begging in the stores or big farms. At times he used to beg and steal, he had a philosophy of his own the entire world was a sort of rattrap. People were lured by the various pleasures of life just as a rat is attracted by cheese or pork. One day he met an old man as he was seeking shelter for the night. He was given hot porridge, tobacco to smoke and they even played cards. The old man showed the vagabond his money pouch and the three ten kroner notes. He slept that at the old man’s house and the next day he left the house with the three notes. He wandered into the forest for fear being caught for his thievery. He lost his way and finally stumbled into Ramsjo Ironworks in search of warmth and shelter. The owner of the Ironworks mistakes him to be an old friend and took him home. The vagabond played along but later requested to go back to the warmth of the forge. The Ironmaster sent his daughter to bring him back. The gentle and kind nature of the young lady made him follow her. Once he cleaned and shaved, the Ironmaster realized that he was a stranger. He asked the vagabond to leave his house but his daughter wanted him to stay. He ate and slept the entire day. On Christmas Eve the Ironmaster and his daughter went to church. At the church they heard that a vagabond had stolen money from an old man who had worked as crofter at Ramsjo Ironworks. The young lady became very sad and the Ironmaster was sure that all his silver spoons would have disappeared. On their return the valet said that the vagabond had left and he did not take anything along with him. On the contrary he left a small gift for the young lady. The vagabond had returned the stolen money along with a rattrap as a gift to the young lady. He wrote a note thanking her for her kindness and asked her to return the money back to the old man. The money was like bait that drew him to it and he would have been like a rat who got caught in the trap called ‘love of money’. Conclusion: The author has very well brought the condition of the vagabond. It is important to treat them as human beings and maybe a little love and affection can work wonders in transforming them into honest and sociable people.

The Characteristics Of Jazz And Blues Langston Hughes s ...

The Characteristics of Jazz and Blues in Langston Hughes’s The Weary Blues While I was reading Langston Hughes’s poems, I have noticed his outstanding accomplishment in his blending creation of Negro musical characteristics and poetry. And The Weary Blues is his peaked piece of a combination of both jazz and blues. The poem reflected American African’s living situation during the Harlem Renaissance, it sufficiently revealed the cultural charm of Negros and Hughes’s fully affirms of his national dignity. In my paper, I will analyze the methods and techniques Hughes used to highlight the musical elements in this poem. Jazz and blues are both styles of music which were discovered by Negros. They are important to Hughes and his culture, and according to the sad and painful tunes in jazz and blues, Hughes wanted us to listen and understand his culture from this poem. The Weary Blues has a rather oral character style; the fundamental key is very slow and sentimental, but the poem is full of musicality, and makes readers felt if they are staying on the scene. I felt not only the special pleasing quality of Negro’s ballad, but also felt depressed from Negro’s circumstances during that time. So I have decided to focus on the analysis of the structural, style of language, along with the jazzy and blues’ characteristics in the image of theme. And apparently, I will use structuralism and a touch on linguistics as my criticisms to argue my statement. In the external form str ucture ofShow MoreRelated Analysis of Theme for English B by Langston Hughes Essay1793 Words   |  8 Pages Langston Hughes was an African American poet and author who joined other black artists to break literary barriers during the civil rights movement. The poem entitled Theme for English B was written thirty years or so after the birth of the Harlem Renaissance, but still embodies why the Renaissance had originated in the first place. I believe this poem reflected on Hughes life in general, but more importantly on the fight against the ignorance that created discrimination. James Mercer LangstonRead MoreThe Harlem Renaissance s Influence On People s Views On African American Lifestyles Through Poetry Essay2428 Words   |  10 PagesTravel back in time several centuries ago to the 1900’s and imagine how different life would be – oil lamps/candles, outhouses or one toilet shared between several people, movies known as â€Å"flickers† and lasting no longer than 10 minutes, no television, ice boxes as opposed to refrigerators, baseball being the main sport that people followed as opposed to football, and unless you were a White male, your lifestyle was not filled with many opportunities or rights. With slavery being abolished not tooRead MoreBrief Summary of the Harlem Renaissance.1863 Words   |  8 Pageshad begun a steady development just before the turn of the century. In the performing arts, black musical theater featured such accomplished artists as songwriter Bob Cole and composer J. Rosamond Johnson, brother of writer James W eldon Johnson. Jazz and blues music moved with black populations from the South and Midwest into the bars and cabarets of Harlem. In literature, the poetry of Paul Laurence Dunbar and the fiction of Charles W. Chesnutt in the late 1890s were among the earliest works of AfricanRead More Visions of The Primitive in Langston Hughes’s The Big Sea Essay examples6201 Words   |  25 PagesVisions of â€Å"The Primitive† in Langston Hughes’s The Big Sea Recounting his experiences as a member of a skeleton crew in â€Å"The Haunted Ship† section of his autobiography The Big Sea (1940), Langston Hughes writes This rusty tub was towed up the Hudson to Jonas Point a few days after I boarded her and put at anchor with eighty or more other dead ships of a similar nature, and there we stayed all winter. ...[T]here were no visitors and I almost never went ashore. Those long winter nights