Consider a Five-Year Floating Rate Loan with Principal of $10

question 12

Multiple Choice

Consider a five-year floating rate loan with principal of $10 million and quarterly payments based on the three-month bbalibor rate.Suppose the bbalibor rates are 0.01 for the first three years and 0.02 for the last two years.What is the value of the floating rate loan on its first quarterly payment date?

• A) $9.27 million
• B) $9.85 million
• C) $9.90 million
• D) $10 million
• E) $10.55 million

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Definitions:

Roman Law

The legal system of ancient Rome, which serves as the basis for civil law in many modern countries.

Legal Positivism

A theory of law that holds that laws are rules made by human beings and are not derived from morality or any external source of authority.

Legal Realism

A theory of law that emphasizes the role of judges' personal views and real-world consequences in judicial decision-making.

Natural Law Theory

A philosophical theory asserting that certain rights or values are inherent by virtue of human nature and can be universally understood through human reason.