L'Oreal (bank account at Alpha Bank) issues $60,000 face value bonds for the price of $56,000; the bonds have a four year maturity and pay $5,000 coupons once a year. A third of the bonds are bought by Alpha Bank (transaction 1) while the other two thirds are bought by SuperManage, a managed fund banking at Beta bank (transaction 2).  a. Draw the variations in Alpha Bank's balance sheet due to the two transactions above. Use only one single balance sheet and indicate the number of the transaction to which it relate at the end of each entry between brackets  [example  Notes: + 700 (1) where (1) refers to transaction 1] .(2 marks)b. Conclude how the stock of bank deposits and the stock of central bank deposits in the financial system have changed as a result of these two transactions. Explain your answers.(1 mark)c. Draw how L'Oreal's balance sheet is changing at the time of the first coupons payment. Clearly distinguish between coupon payment and amortisation. Show the details of your calculation separately. What is the book value of the bonds issued after that transaction?

L'Oreal, a beauty product company, issues $100 face value bonds at the price of $60. The maturity of the bond is 2 years and the bond pays coupons every six months. Which of the following statement is NOT correct?A.At maturity date, when amortization is complete, the redemption value (ignoring the final coupon) to get rid of the bonds from the balance sheet will be $100.B.The change in equity at the time of each coupon payment due to amortisation alone is a gain of $10.C.The amortization value at the time of each coupon payment is $10.D.After 1 year and a half, after the payment of a third coupon, the value of the bond recorded in the balance sheet of L'Oreal is $90.E.At the time of each coupon payment, the value of the bond in the balance sheet increases by $10.

L'oreal bonds were issued at $80 and are now trading in the secondary market at the price of $110.Which of the following statements is NOT correct?A.A new investor, who buys the bond now, makes a capital gain of $0 at the time of purchase.B.The transaction brings $30 new funding to the issuer.C.The issuer records a loss, unrelated to the fluctuations in the secondary market.D.A new investor, who buys the bond now and plans to keep it until maturity date, expects to make a capital loss of $10.E.An investor, who bought the bond at issue and sells it now, makes a capital gain of $30.

When L'oreal, a beauty product company, buys back its own shares with its transactional bank account, ____________________________.A.its liabilities decreaseB.it reallocates its assetsC. its balance sheet shrinksD.its shares on issue increaseE. its accumulated profit increases if the price of the share has increased since the issue of the shares

Which of the following transactions results in Alpha Bank destroying bank deposits in its own balance sheet?A.Alpha Bank receives dividends from its customers.B.Alpha Bank pays a coupon to its customers.C.Alpha Bank's customer receives a salary from a depositor at another bank.D.Alpha Bank buys a financial instrument issued by its customers.E.None of the above transactions destroy money in Alpha Bank.

Alpha enters into a lease with Omega of an aircraft which had a fair value of $240,000 at the inception of the lease. The lease terms require Alpha to pay 10 annual rentals of $36,000 in arrears. Alpha is wholly responsible for the maintenance of the aircraft which has a useful life of approximately 15 years. The present value of the 10 annual rentals of $36,000 discounted at the interest rate implicit in the lease is $220,000.Applying the requirements of IFRS 16 Leases to this agreement what is the increase in Alpha’s non-current assets? A. $0 B. $220,000 C. $240,000 D. $360,000