Determine the annualized loan rate for libors

Reference no: EM13925822

A large, multinational bank has committed to lend a firm $25 million in 30 days at LIBOR plus 100 bps. The loan will have a maturity of 90 days, at which time the principal and all interest will be repaid. The bank is concerned about falling in- terest rates and decides to buy a put on LIBOR with a strike of 9.5 percent and a premium of $60,000. Determine the annualized loan rate for LIBORs of 6.5 percent and 12.5 percent. Assume the payoff is based on 90 days and a 360-day year. The current LIBOR is 9.5 percent.

Reference no: EM13925822

Questions Cloud

What type of wireless protection do you use : What type of Wireless protection do you use on your home network? Advantages, disadvantages? Discuss a couple of different ways that you can "harden" your home wireless network protection

Carry out the anova test to check for differences : A biologist wishes to know if the mean masses of starlings sampled in four different roost situations are different. A sample of 10 units (starlings) obtained from each situation. Carry out the ANOVA test to check for differences.

Allocation base and analyzing manufacturing overhead : Amberjack Company is trying to decide on an allocation base to use to assign manufacturing overhead to jobs. The company has always used direct labor hours to assign manufacturing overhead to products, but it is trying to decide whether it should ..

Calculate the price of bond : ABC has issued a bond with the following characteristics:?Par: $1,000; Time to maturity: 11 years; Coupon rate: 10%; ?Assume annual coupon payments. Calculate the price of this bond if the YTM is 11.4%

Determine the annualized loan rate for libors : Determine the annualized loan rate for LIBORs of 6.5 percent and 12.5 percent. Assume the payoff is based on 90 days and a 360-day year. The current LIBOR is 9.5 percent.

Importance of regular monitoring and maintenance of website : Discuss the importance of regular monitoring and maintenance of a website. What should be checked on a regular basis

Calculate your position coordinates every 50 seconds : Calculate your position coordinates every 50 seconds until you reach the entrance, then plot a graph of your trajectory. Be sure to label the position of the entrance.

Determine the effective cost of borrowing : If you have a financial calculator or a spreadsheet with an IRR function, solve for the internal rate of return and annualize it to determine the effective cost of borrowing.

Predicting cost behavior-calculating contribution margin : Presidio, Inc. produces one model of mountain bike. Partial information for the company follows: Bikes Cost per Unit: 625 800 1050

User Account

All Pages