Assume that Turki Bank has contracted to buy a 5-year interest rate cap for a 2% fee
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Question:
Assume that Turki Bank has contracted to buy a 5-year interest rate cap for a 2% fee based on a notional amount of KD 50 million. Assume that the LIBOR rate (assuming still working) is the contracted rate and that the contracted ceiling (cap) of the interest rate is 5%. Based upon that, you need to find out the missing figures in the following table.
Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
LIBOR | 5.91% | 4.93% | 7.28% | 6.94% | 4.62% |
Interest rate Floor | 5% | 5% | 5% | 5% | 5% |
Amount Received | A= ? | B= ? | C= ? | D= ? | E= ? |
Amount Paid | F = ? |
Related Book For
Advanced Accounting
ISBN: 978-1934319307
2nd edition
Authors: Susan S. Hamlen, Ronald J. Huefner, James A. Largay III
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