Exhibit 23.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 63

Multiple Choice

Exhibit 23.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
A company buys an interest rate cap that pays the difference between LIBOR and 8% if LIBOR exceeds 8%. Current LIBOR is 7%. The amount of the option is $2,500,000, and the settlement is every 6 months. Assume a 360 day year.
-Refer to Exhibit 23.1. Find the payoff if LIBOR closes at 8.2%.

• A)$0.00
• B)$25,000.00
• C)$50,000.00
• D)-$25,000.00
• E)-$50,000.00

---

Definitions:

Income Percentage

The proportion of a person's or entity's income relative to a specific benchmark or total income, often used in financial analysis and planning.

Shadow Welfare State

A term describing indirect government social welfare policies implemented through tax breaks, subsidies, and other means not directly recognized as social welfare spending.

Tax Breaks

Governmental incentives that reduce the tax liability of individuals or businesses, encouraging certain economic activities or investments.

Tax Expenditures

Tax expenditures are government revenue losses attributed to tax provisions allowing special exclusions, exemptions, or deductions from taxable income or providing tax credits.