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

question 25

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 Megabuks.

• A) The dealer is obligated to pay Megabuks $38,215.00
• B) Megabuks is obligated to pay the dealer $31,818. 54.
• C) Megabuks is obligated to pay the dealer $38,215.00
• D) The dealer is obligated to pay Megabuks $30,818.54.
• E) None of the above

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Definitions:

Retroviruses

A group of RNA viruses that insert a DNA copy of their genome into the host cell in order to replicate, e.g., HIV.

Invading Organisms

Pathogens, such as bacteria, viruses, and parasites, that enter the body and cause various diseases or infections.

Antigens

Substances that provoke an immune response, including the production of antibodies, when detected by the body.

Lymph Nodes

Small, bean-shaped structures that filter lymph fluid and play an essential role in the body's immune response.