Mike Is Supposed to Pay $750 to Sarah, but Wishes

question 277

Multiple Choice

Mike is supposed to pay $750 to Sarah, but wishes to delay it for 48 days. Determine the amount Sarah should expect in 48 days if the rate of interest is 6.55%

• A) $756.46
• B) $765.66
• C) $771.55
• D) $793.12
• E) $795.61

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Definitions:

Marking-to-market

The practice of updating the value of an asset to its current market level rather than its book value for accounting purposes.

Settlement Day

The specific day on which the transfer of securities or commodities between buyer and seller is completed.

Swap Dealer

An individual or entity that acts as a counterparty in swap agreements, often in the derivatives and commodities markets.

Commercial Bank

A financial institution that offers services such as accepting deposits, providing business loans, and offering basic investment products.