23-114 What Should Be the Price of a $5,000,000 Collar

question 41

Multiple Choice

23-114 What should be the price of a $5,000,000 collar if the bank purchases a three-year 6 percent cap and sells a 5 percent floor,if the current (spot) rates are 6 percent?

• A)The bank will receive net $2,010.
• B)The bank will receive net $31,651.
• C)The bank will pay net $31,651.
• D)The bank will pay net $2,010.
• E)price = $0

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Definitions:

Identifies

Recognizes or establishes the identity of someone or something, often through analysis or comparison.

Recipient

An individual or entity that receives something from another source, such as a transfusion, donation, or award.

Letter Sent

The action of dispatching written correspondence to a specific recipient or address.

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Businesses that specialize in arranging travel services and accommodations for individuals and groups.