USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 73

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 4.7 percent.

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

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Definitions:

External Environment

All external forces or factors that impact an organization's performance, including competition, economy, laws, and social trends.

Diverse Environments

Contexts or settings characterized by a wide range of differences, including cultural, biological, social, and ecological variation.

Mechanistic Structures

Organizational designs characterized by rigid hierarchies, strict rules, and clear, centralized decision-making processes.

Stable Environments

Environments that are consistent, predictable, and relatively unchanging over a period of time.