Exhibit 23.10 Use the Information Below for the Following Problem(S)

question 41

Multiple Choice

Exhibit 23.10
Use the Information Below for the Following Problem(S)
TexMex Corporation has decided to borrow $50,000,000 for six months in two three-month issues. The corporation is concerned that interest rates will rise over the next three months. Thus, the corporation purchases a 3 × 6 FRA whereby the corporation pays the dealer's quoted fixed rate of 3.5% in exchange for receiving 3-month LIBOR at the settlement date. In order to hedge her exposure, the dealer buys LIBOR from Newport Inc. at its bid rate of 3%. The notional principal is $50,000,000 and that there are 60 days between month 3 and month 6.
-Refer to Exhibit 23.10.Suppose that 3-month LIBOR is 4.00% on the rate determination day,and the contract specified settlement in advance,describe the transaction that occurs between the dealer and Newport.

• A) The dealer is obligated to pay Newport $123,762.
• B) The dealer is obligated to pay Newport $125,000.
• C) Newport is obligated to pay the dealer $125,000.
• D) Newport is obligated to pay the dealer $123,762.
• E) None of the above

---

Definitions:

Religious Beliefs

Convictions or faith in specific religious principles, deities, or doctrines that guide individuals' thoughts and actions.

Critical Rationalists

Philosophers or thinkers who emphasize the importance of critical scrutiny and rational argument in the pursuit of knowledge.

Contrary Evidence

Information or data that challenges or contradicts a particular belief, hypothesis, or theory.

Formal Training

Structured educational or skill development programs provided by organizations or institutions.