A technology company wants to offer a $30 million, 6-months deposit to one of its major clients at6-months LIBOR is less than 2.5%.The 6-month LIBORis 3.5%.Thebankintendstousethe proceedsofthisdeposittobuya 4.0%3-monthscommercialpaperandto rollover the investment for another three months at the end of its fiscal year. The agreement rate with the selleris4.5%.Thereare94days inthefirstthreemonthsand92daysintheremaining three months period.

A.Calculate the banks interest expense on the 6-month Euro dollar deposit.

B.Calculate the bank interest income on the first three month commercial paper loan.C

C..Calculate the value of the FRA from the last three months of the investment period if 3-months LIBOR (SR) for that period is 5.5%.