Exhibit 21 -Refer to Exhibit 21

question 14

Multiple Choice

Exhibit 21.3
Use the Information Below for the Following Problem(S)
As a relationship officer for a money-center commercial bank, one of your corporate accounts has just approached you about a one-year loan for $3,000,000. The customer would pay a quarterly interest expense based on the prevailing level of LIBOR at the beginning of each quarter. As is the bank's convention on all such loans, the amount of the interest payment would then be paid at the end of the quarterly cycle when the new rate for the next cycle is determined. You observe the following LIBOR yield curve in the cash market:
$\begin{array}{ll}90 \text {-day LIBOR } & 4.70 \% \\180 \text {-day LIBOR } & 4.85 \% \\\text { 270-day LIBOR } & 5.10 \% \\\text { 360-day LIBOR } & 5.40 \%\end{array}$
-Refer to Exhibit 21.3.What is the implied 90-day forward rate at the beginning of the third quarter?

• A) 5.10%
• B) 5.47%
• C) 4.70%
• D) 4.85%
• E) None of the above

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Definitions:

Commoditization

The process where products become indistinguishable from each other in the eyes of the consumer, leading to competition primarily on price.

Protectionism

Protectionism is an economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations.

Exploitation

The act of making use of resources or advantages for one's own benefit, often without regard for ethics or fairness.

Skimming Strategy

A pricing strategy in which a company charges the highest initial price that customers will pay and then gradually lowers the price to attract more price-sensitive customers.