ABC International Can Borrow $4,000,000 at LIBOR Plus a Lending

question 37

Multiple Choice

ABC International can borrow $4,000,000 at LIBOR plus a lending margin of .65 percent per annum on a three-month rollover basis from Barclays in London. Three month LIBOR is currently 5.5 percent. Suppose that over the second three-month interval LIBOR falls to 5.0 percent. How much will ABC pay in interest to Barclays over the six-month period for the Eurodollar loan?

• A)$50,000
• B)$100,000
• C)$118,000
• D)$120,000

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Definitions:

Compensation Package

The total offering of pay and benefits provided to employees, including salary, bonuses, health insurance, and retirement benefits.

Chief Executive Officer

The highest-ranking executive in a company, responsible for making major corporate decisions, managing overall operations, and acting as the main point of communication between the board of directors and corporate operations.

Board of Directors

A group of individuals elected to represent shareholders and govern the company's activities by establishing policies and making decisions.

Enterprise Incentive Plans

Strategic programs designed to encourage and reward employee performance across an organization, typically aligning with broader business goals.