Discuss the following statement. "The rise and general availability of artificial

intelligence and the public availability of relevant data undermine the existence of financial

intermediaries such as banks because the credit quality can then easily be estimated by

everyone."

Exercise. The CFO of a company receives a quote from his bank for a forward interest

rate $2f2.$ After all the company will have an amount of euro $12,500,000$ to invest for $2$ years

within $2$ years and the CFO fears that market interest rates will fall by then as the inflation is

declining structurally, In order to avold this fall in market interest rates, he wants to fix the

interest rate for that future investment already today. The received quote for $2f2,$ is $45\%.$

CFO wants to calculate how much profit the

bank wants to take at the expense of his company. He has the following information:

The yield of a zero coupon on $1$ year is $2\mathrm{.}5\%$

The price of a bond with a maturity of $2$ years and a coupon of $3\%$ is $99\mathrm{.}55$

$($for a nominal of $100)$

The spot interest rate on $3$ years $3\mathrm{.}75\%$

The forward interest rate $1$ year within $3$ years is $4\mathrm{.}75\%$

What is the af based on this data? What will be the bank's total profit in euros

if the CFO accepts the quote? Round all numbers to two diaits.