Solution-Hurt the profit margin, As a banker at one of the

Hurt the profit margin

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Reference no: EM133121964

As a banker at one of the Islamic banks, you intend to provide a RM 100 million fixed-rate financing to a corporate client 90 days from now at a 10% profit rate. Your bank's cost of funds is the KLIBOR rate, and the following quotes are available

3-month KLIBOR spot = 6%

3-month KLIBOR futures = 93.00

A rise in KLIBOR spot could hurt the profit margin.

Now, If the interest rates go up by 150 basis points over the next 90 days, show the result of the hedge, i.e., profit or loss from futures, interest spread, interest earned, total earning, percentage earning, and percentage earning annualized.

Reference no: EM133121964

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Hurt the profit margin : As a banker at one of the Islamic banks, you intend to provide a RM 100 million fixed-rate financing to a corporate client 90 days from now at a 10% profit rate

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Hurt the profit margin

Reference no: EM133121964

Reference no: EM133121964

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