Interest rates are currently 5%. An FI has purchased a $200 million floor (i.e., put option on interest rates) of 4 percent at a premium of 0.7 percent of face value. Rates fall to 3 percent. What is the net financial result (annualised) for the FI at this point?

Answer rating: 100% (QA)

To calculate the net financial result for the financial institution FI in this scenario we need to c... View the full answer