Microhard Corp

question 42

Multiple Choice

Microhard Corp.borrowed via a bank bill facility and has fully hedged its exposure using BAB futures contracts.The effective borrowing rate for the funds is:

• A)determined by the market interest rates on rollover dates
• B)the forward yields on the BAB futures contracts
• C)the current market interest rate
• D)the agreed yield.
• E)None of these are correct.

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Definitions:

Percent Equivalent

The fractional amount expressed as a part of one hundred.

Compound Interest

This form of interest computation involves calculating interest on both the initial principal amount and any interest that has accrued in the past periods on a loan or deposit.

Percent Equivalent

The numeric representation of a ratio or fraction as a part of 100.

Fraction

A numerical quantity that is not a whole number, represented by two numbers divided by a line, indicating part of a whole.