USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 98

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
As a relationship officer for a money-center commercial bank, one of your corporate accounts has just approached you about a one-year loan for $3,000,000. The customer would pay a quarterly interest expense based on the prevailing level of LIBOR at the beginning of each quarter. As is the bank's convention on all such loans, the amount of the interest payment would then be paid at the end of the quarterly cycle when the new rate for the next cycle is determined. You observe the following LIBOR yield curve in the cash market:

-Refer to Exhibit 15.3. If 90-day LIBOR rises to the levels "predicted" by the implied forward rates, what will the dollar level of the bank's interest receipt be at the end of the fourth quarter?

• A) $36,223.50
• B) $40,500.00
• C) $38,250.00
• D) $36,375.00
• E) $0

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Definitions:

Beni Hasan

An ancient Egyptian cemetery site comprising numerous tombs, dating back to the Middle Kingdom period.

Block Statue

In ancient Egyptian sculpture, a cubic stone image with simplified body parts.

Senenmut

An 18th Dynasty ancient Egyptian architect and government official, known for his close relationship with Queen Hatshepsut.

Sculptural Form

The three-dimensional shape or configuration of a sculpture, emphasizing contours, volumes, and spatial relationships.