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Assume that the Bonk of Topeka anticipates that Interest rates will increase over the next several years and decides to hedge the interest rate risk
Assume that the Bonk of Topeka anticipates that Interest rates will increase over the next several years and decides to hedge the interest rate risk on its portolios by purchasing a three-year interest, rate collar, which uses LiBOR as the index used to represent the prevalting interest rate, The interent rate cap specifies a fee of 3 percent of notional principal valued at $90 milion with an interest rate celling of 8 percent. The interest rate floor specifies a fee of 3 percent of notional principal valued at $90 millon and an interest rate floor of 7 percent. Given this information, fill in the table that follows
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