A Company Will Need to 'Roll Over' Its Existing $500

question 32

Multiple Choice

A company will need to 'roll over' its existing $500 000 funding arrangement in two months' time for a further 90 days.It is concerned that interest rates in the short-term debt market may rise in the mean time,and decides to manage the risk exposure by entering into a forward rate agreement with its bank.The bank quotes a price (2Mv5M) of 9.45 to 30.In two months' time the reference rate (BBSW) is 10.20% per annum.Calculate the settlement amount.

• A) $881.43
• B) $1058.10
• C) $1423.80
• D) $3750.00

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Definitions:

Language Shapes Thoughts

The theory that the structure and vocabulary of the language one speaks influence how one thinks about the world.

Fragile X Syndrome

A genetic condition that causes a range of developmental problems including learning disabilities and cognitive impairment, linked to a mutation of the FMR1 gene on the X chromosome.

Gene

A unit of heredity that is transferred from a parent to offspring and is held to determine some characteristic of the offspring.

X Chromosome

One of the two sex chromosomes, X and Y, with the X chromosome carrying genes essential for the development of female physical characteristics and playing a role in male development as well.