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An Fl has purchased a $205 million cap of 7 percent at a premium of 0.60 percent of face value. A $205 million floor of

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An Fl has purchased a $205 million cap of 7 percent at a premium of 0.60 percent of face value. A $205 million floor of 4.5 percent is also available at a premium of.65 percent of face value. a. If interest rates rise to 8 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 9 percent? What are the net savings if interest rates fall to 3.5 percent? (Negative amounts should be indicated by a minus sign.) c. If, instead, the Fl sells (writes) the floor, what are the net savings if interest rates rise to 9 percent? What if they fall to 3.5 percent? (Negative amounts should be indicated by a minus sign.) a. Amount received Net savings Net savings if interest rates rise to 9 percent Net savings if interest rates fall to 3.5 percent c. Net savings if interest rates rise to 9 percent Net savings if they fall to 3.5 percent

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