Subject: general Accounting A local credit union purchases a one-year interest rate capwith a cap rate of 4.75 percent from a financial institution.The option has a notional principal of $3 million and costs$5,100. In one year, interest rates are 5.62 percent. Thecredit union's net profit, ignoring commissions and taxes,was:a. $20,100b. $16,300c. $17,850d. $14,200e. $11,500

The credit union purchases an interest rate cap with:Cap rate = 4.75%Notional principal =…

Answered: A local credit union purchases a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 30P

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