You are a UK bank and some time ago you agreed the interest rate and sum of
Fantastic news! We've Found the answer you've been seeking!
Question:
You are a UK bank and some time ago you agreed the interest rate and sum of a loan for forward dates from the UK's Central Bank, the Bank of England (BoE is default free). Under this agreement you contracted to; 1) receive 10,000 in June 2035 from the BoE and 2) repay 12,000 in June 2036, exactly one year later to them (there are no other payments).
- What annual % interest rate did you agree to pay for the year June 2035 - June 2036?
- What features and figures would have been taken into account in the past when that loan rate was negotiated and agreed.
It is now June 2030 and you observe the following p.a. zero coupon rates for default free credits for different maturities (they are quoted both in discrete and continuous terms, you can use either for the calculations, or both to check).
Related Book For
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
Posted Date: