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Assume that Turki Bank has contracted to buy a 5-year interest rate cap for a 2% fee based on a notional amount of KD 50

Assume that Turki Bank has contracted to buy a 5-year interest rate cap for a 2% fee based on a notional amount of KD 50 million. Assume that the LIBOR rate (assuming still working) is the contracted rate and that the contracted ceiling (cap) of the interest rate is 5%. Based upon that, you need to find out the missing figures in the following table.




Year 1



Year 2


Year 3


Year 4


Year 5

LIBOR

5.91%

4.93%

7.28%

6.94%

4.62%


Interest rate Floor


5%

5%

5%

5%

5%

Amount Received


A= ?

B= ?

C= ?

D= ?

E= ?

Amount Paid

F = ?






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