Question: (TCO E & F) A thrift purchases a one year interest rate floor with a floor rate of 4.23% from a large bank. The option

(TCO E & F) A thrift purchases a one year interest rate floor with a floor rate of 4.23% from a large bank. The option has a notional principle of $1 million and costs $2,000. If in one year interest rates are 3% the thrift's net profit, ignoring commissions and taxes was _____ and if in one year interest rates were 2% the thrift's net profit was _____. $0; $7,500 $8,800; -$2,000 $8,800; $0 $29,500; - $2,000 $29,500; $0

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Assume the same information for TelMark as in Exercise 11-24. A member of the data science team points out that overfitting is often an issue with decision trees. To avoid this issue, he suggests...

A thrift purchases a one-year interest rate floor with a floor rate of 4.23 percent from a large bank. The option has a notional principal of $1 million and costs $2,000. If in one year, interest...

I need to create an executive level report on the internal management of Belk. Inc. My assignment is that I am looking to acquire Belk, What information and analysis do I need to have in this report?...

CORRECTLY ANSWERSED You and your team work for an educational institution that has 5 campuses and over 40,000 students. Since March 2020, all campuses were closed due to COVID-19 virus presence in...

Assignment 1: Forwards and Futures, Interest Rate Derivatives and Swaps Due: Monday, February 15, 2015 All assignments are due on Monday 15th February 2015 by 6:00 p.m. at the latest. Late...

CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios:...

Pls answer the following guiding questions based on the case study in the picture Liability Management at General Motors 1. How has GM measured its exposure? How would you propose that GM measures...

Accounting questions. Refer to Campbell Soup Company's financial Campbell Soup CASE 1-5 statements in Appendix A. Financial Statement Required: Ratio Computation Compute the following ratios for Year...

It's a case study of GM ( read corp 2.docx). Want to know the answer of Q1, Q2, Q3, Q4 ( from corp.docx) General Motors Stephane Bello, an analyst in the Capital Markets group at General Motors (GM),...

Why is it important for us to understand how the global system of financial institutions and markets works? ros57395_ch01.qxd 12/21/04 2:45 PM Page 1 Part 1 The Global Financial System in Perspective...

The Laplace transform was applied to the initial value problem y'= Ay, y(0) - 9/1,0 yo A is a 2 x 2 constant matrix, and yo= The following transform domain solution was obtained where y(t) = [(0)]...

Lloyd Company earns 6% on an investment that will return $450,000 eight years from now. What is the amount Lloyd should invest now to earn this rate of return?

An investment has an expected return of 1 . 3 4 percent per month, is expected to make monthly payments of $X for 7 6 months, is worth $ 1 7 5 , 9 5 3 , and the first payment is expected later today....

P-1) (100 Pts.) A chemical manufacturing company (CMC) has a contract for the procurement of the neccssaly chemicals from four suppliers. The chemicals purchased from Supplier A are priced at $20...

Work with your instructor to select and locate a copy of a policy that applies to students at your school (i.e., adding/dropping a class; using the Internet to download music; posting flyers to...

How does the purpose of a proposals cover letter or memo differ from the purpose of the proposals summary? (Objective 3)

What is the inverted pyramid format? Why is it used when composing news releases? (Objective 6)