Question
For Karl's 20-year 700,000 euro loan in the problem above, determine the actual rate he will pay in the table below if LIBOR +1% is
For Karl's 20-year 700,000 euro loan in the problem above, determine the actual rate he will pay in the table below if LIBOR +1% is as shown below and if The annual cap is 1.5%, the annual floor is 1%, and the lifetime cap = 3% and the lifetime floor = 2% a. Fill out the table below: (6 points) for the actual rates paid for years 3-8 LIBOR+1% Actual rate paid year 1 2.4% 2.4% year 2 3.6% 3.6% year 3 1.6% year 4 1.4% year 5 3.2% year 6 5.0% year 7 5.8% year 8 7.9%
B.What is the lowest actual rate that Karl would ever pay over the 20 year period, even if LIBOR was zero?
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