An FI buys a $500 million cap of 7 percent at a premium of 0.75 percent of face value. In addition, it sells a $500 million 3 percent apartment with a premium of 0.70 percent of face value.
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If interest rates rise to 7.25%, what is the net profit of the FI?

Answer rating: 100% (QA)

To calculate the net profit of the FI we need to consider the gains or losses from the purchase and ... View the full answer