An FI has purchased a $216 million cap of 10 percent at a premium of 0.85 percent of face value.

Problem 10-16 (LG 10-8) An FI has purchased a $216 million cap of 10 percent at a premium of 0.85 percent of face value. A $216 million floor of 5.6 percent is also available at a premium of.90 percent of face value. a. If interest rates rise to 11 percent, what is the amount received by the FI? What are the net savings after deducting the premium? b. If the Fl also purchases a floor, what are the net savings if interest rates rise to 12 percent? What are the net savings if interest rates fall to 4.6 percent? (Negative amounts should be indicated by a minus sign.) c. If, instead, the FI sells (writes) the floor, what are the net savings if interest rates rise to 12 percent? What if they fall to 4.6 percent? (Negative amounts should be indicated by a minus sign.) a. Amount received Net savings b. Net savings if interest rates rise to 12 percent Net savings if interest rates fall to 4.6 percent C. Net savings if interest rates rise to 12 percent Net savings if they fall to 4.6 percent Problem 10-16 (LG 10-8) An FI has purchased a $216 million cap of 10 percent at a premium of 0.85 percent of face value. A $216 million floor of 5.6 percent is also available at a premium of.90 percent of face value. a. If interest rates rise to 11 percent, what is the amount received by the FI? What are the net savings after deducting the premium? b. If the Fl also purchases a floor, what are the net savings if interest rates rise to 12 percent? What are the net savings if interest rates fall to 4.6 percent? (Negative amounts should be indicated by a minus sign.) c. If, instead, the FI sells (writes) the floor, what are the net savings if interest rates rise to 12 percent? What if they fall to 4.6 percent? (Negative amounts should be indicated by a minus sign.) a. Amount received Net savings b. Net savings if interest rates rise to 12 percent Net savings if interest rates fall to 4.6 percent C. Net savings if interest rates rise to 12 percent Net savings if they fall to 4.6 percent