A Thrift Purchases a One-Year Interest Rate Floor with a Floor

question 18

Multiple Choice

A thrift purchases a one-year interest rate floor with a floor rate of 4.23 percent from a large bank. The option has a notional principal of $1 million and costs $2,000. If in one year,interest rates are 3.15 percent,the thrift's net profit,ignoring commissions and taxes,was ________; and if in one year,interest rates were 5.2 percent,the thrift's net profit was ________.

• A)$0; $7,500
• B)$8,800; −$2,000
• C)$8,800; $0
• D)$29,500; −$2,000
• E)$29,500; $0

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Definitions:

Optimism

A mental attitude characterized by hope and confidence in success and a positive future.

Self-Efficacy

is the belief in one's own ability to succeed in specific situations or accomplish a task, which can play a significant role in how one approaches goals, tasks, and challenges.

Academic Performance

Refers to the level of achievement or competence of an individual in educational activities.

Self-Efficacy

The belief in one's own ability to successfully accomplish tasks and goals, which is crucial for motivation and performance in various aspects of life.