Exhibit 21 -Refer to Exhibit 21

question 87

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 fourth quarter?

• A) 6.19%
• B) 5.10%
• C) 6.07%
• D) 5.68%
• E) None of the above

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Definitions:

Investment Banks

are specialized financial institutions that assist individuals, corporations, and governments in raising capital, offering advisory services and underwriting issuances.

Issuing Securities

The process in which new securities are created and sold to investors, typically involving bonds, stocks, or other financial instruments.

Firm Commitment Underwriting

An arrangement where an underwriter guarantees to purchase all securities offered by an issuer and assumes the risk of selling them to the market.

Underwriter

An entity that assesses and accepts financial risk on behalf of clients, often seen in contexts such as insurance and initial public offerings.