Determine the annualized loan rate for libors

Reference no: EM131290686

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 interest 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: EM131290686

Questions Cloud

What is the expected time for activity h : What is the expected (estimated) time for activity H? What is the variance for activity H? Based on the calculation of estimated times, what is the critical path? What is the estimated time of the critical path?

Determine your annualized return on the loan : The payoff is based on the exact number of days and a 360-day year. If you have a financial calculator or spreadsheet with an IRR function, determine the internal rate of return and annualize it to determine your annualized return on the loan

List three skus that were purchased most frequently together : List the SKU which was purchased the most. List the three SKUs that were purchased most frequently together. List the four SKUs that were purchased most frequently together.

Issue among the immigrants in minnesota : Differences existed in the social practices of the ethnic groups and Inheritance of land was a cultural customs and was governed by isolation by each ethnic groups.

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.

Determine the effective cost of borrowing : The payoff is based on the exact number of days and a 360-day year. 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.

Challenge facing hrm professions : Finally, before the end of the class week, post a summation statement discussing how the challenges facing HR professionals also present opportunities to secure a place at the "executive" table.

Identify the ways in which process could challenge security : Identify three ways in which a process could challenge the security of a computer system if not prevented from doing so by the operating system.

Determine the firm’s cash flows on the loan : The current LIBOR is 10 percent. Determine the firm's cash flows on the loan if LIBOR turns out to be 11.35 percent on April 16, 10.2 percent on July 15, and 8.86 percent on October 14. If you have a financial calculator or spreadsheet, determine ..

User Account

All Pages