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Exhibit 23.3 Use the Information Below for the Following Problem(S)

question 19

Multiple Choice

Exhibit 23.3
Use the Information Below for the Following Problem(S)
Chimichango Industries has decided to borrow $50,000,000.00 for six months in two three-month issues. As the Treasurer, you are concerned that interest rates will rise over the next three months and the rate upon which the second payment will be based will be undesirable. (The amount of Chimichango's first payment will be known at origination.) To reduce the company's interest rate exposure, you decide to purchase a 3 × 6 FRA whereby you pay the dealer's quoted fixed rate of 5.91% in exchange for receiving 3-month LIBOR at the settlement date. In order to hedge her exposure, the dealer buys LIBOR from Megabuks Industries at its bid rate of 5.85%. (Assume a notional principal of $50,000,000.00 and that there are 60 days between month 3 and month 6.)
-Refer to Exhibit 23.3.Assuming that 3-month LIBOR is 5.6% on the rate determination day,and the contract specified settlement in advance,describe the transaction that occurs between the dealer and Chimichango.

Definitions:

Poor Fuel Efficiency

A condition where a vehicle or machine uses a large amount of fuel to travel a short distance, indicating inefficiency in energy use.

Landfills

Sites designated for the disposal of waste material by burying it, often considered the least environmentally friendly method of waste management.

Commercial Harvest

The collection of commercially important organisms from the wild. Examples include the commercial harvest of parrots (for the pet trade) and cacti (for houseplants).

Foreign Species

Species that are introduced into a habitat where they are not natively found, often causing ecological disruption.