According the the passage, Kemigisa will need a loan in 60 days, the loan will mature in 180 days from today. So I presume the loan will lasts for 120 days and interests will be charged on a 120 days term. Furthermore, the interest rate call is also maturing in 60 days.
But the answer suggests to compute the loan interest based on a 180/360 day count factor… why is that?
Did anyone else see the same issue as me? Thanks!
“Kemigisa has determined that in 60 days, Viewmont will also need to raise USD50,000,000 for domestic operations. To protect against a rise in interest rates over this period, Kemigisa is evaluating the purchase of a USD50,000,000 interest rate call option. Interest and principal on the loan is due upon its maturity. Details of the loan and the interest rate call are provided in Exhibit 1.”