Sample Exam 2. Question 18 on the put option and borrowing. The future value of call premium is calculated using (.06 + .01). They infer that this is the rate the company can borrow at. HOWEVER. No where in the question to they inform us that the LIBOR rate on December 15 is 6%. No? May need to resort to the print out of answers and feedback to see this.
this definitely looks wrong. does it make sense that 45,000 [1 + (.06 +.01)(61/360)] = $45,457.50?!!??!?!?!? no way! they used 6% only. they did not add the 1%!!! ARRAHRARAJRJAGRJAYHGRJHAGHJGAJHGRAJHGR