Question: 7) Using the following Data for a CAP agreement: ABC Co. buys a CAP Agreement from Agent Co. The Agreement cost $100,000 / year ABC

7) Using the following Data for a "CAP" agreement: ABC Co. buys a CAP Agreement from Agent Co. The Agreement cost $100,000 / year ABC Co. Pays this each year to Agent Co). The Strike is 4% on the LIBOR %; Notional Amount is 25 Million dollars; Time: 5 Years If LIBOR % is > 4% at the end of each year Agent Co. pays ABC Co. If LIBOR is 6% at the end of the year what does Agent Co. pay XYZ Co based on the information, assuming they exercise the CAP? O A. $200,000 O B. 25,000 O C. 500,000 O D. 250,000
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