Exhibit 14-4 USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 66

Multiple Choice

Exhibit 14-4
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)
A company buys an interest rate cap that pays the difference between LIBOR and 8% if LIBOR exceeds 8%. Current LIBOR is 7%. The amount of the option is $2,500,000, and the settlement is every 6 months. Assume a 360 day year.
-Refer to Exhibit 14-4. Find the payoff if LIBOR closes at 8.2%.

• A) $0.00
• B) $25,000.00
• C) $50,000.00
• D) -$25,000.00
• E) -$50,000.00

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Definitions:

Influence Tactic

Techniques or strategies used to persuade or convince others to follow or support one's position or proposal.

Particular Brand

Refers specifically to an individual brand or product distinguished by its unique qualities or characteristics from others in the market.

Majority

More than half of a group or amount, often referring to the greater part of a total number or quantity.

Limited Edition

Products produced in limited quantities to create exclusivity or appeal to collectors.