USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 4

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
An international investment firm buys an interest rate swap that pays the difference between LIBOR and 6 percent if LIBOR exceeds 6 percent. Current LIBOR is 5 percent. The amount of the option is $1,500,000, and the settlement is every three months. Assume a 360-day year.
-Refer to Exhibit 15.20. Find the payoff if LIBOR closes at 6.3 percent.

• A) -$45,000
• B) -$11,250
• C) $0
• D) $11,250
• E) $45,000

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Definitions:

Jail Terms

The duration of time an individual is sentenced to spend in jail as punishment for a crime.

Ownership

The legal right to possess, use, and dispose of something, whether it be tangible or intangible property.

Parcel Of Land

A specific piece of land that has been defined by boundaries and is considered a unit for the purposes of sale, lease, or development.

Real Property

Land and anything permanently attached to it, such as buildings or trees, including rights associated with the land.