# 2 X Effective Annual Rate Questions For You

4 posts / 0 new

Directly From Schweser!

QBank #93111:

In 60 days, a bank plans to lend \$10 Million for 180 days. The lending rate is LIBOR + 200 bps. The current LIBOR is 4.5%. The bank buys an interest-rate put that matures in 60 days with a notional principal of \$10 Million, days in underlying of 180 days, and a strike rate of 4.3%. The put premium is \$4,000. What is the effective annual rate of the loan if at expiration LIBOR = 4.1%?

a) 6.48%
b) 6.19%
c) 6.40%

2011 Schweser Practice Exam 1 Book 1 #20.3:

In 110 days, the manager of Fund B plans to borrow \$50 Million for 180 days. at a rate of 180-day LIBOR + 150 bps. The current LIBOR is 6.5%. The manager buys an interest-rate call on 180-day LIBOR that matures in 110 days with a premium of \$120,000 and an exercise rate of 6%. What is the effective annual rate of the loan if at expiration LIBOR = 7.3%?

a) 7.30%
b) 8.29%
c) 8.80%

Who said studying can’t be fun? Now there’s a complete study solution for all 3 CFA levels that’s as mobile, smart, and competitive as you are.

1 C

2 B

CFAST

C

B

1. C
2. B

Subscribe toComments for "2 X Effective Annual Rate Questions For You"