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Golden Corporation invests in a 4.8% interest rate cap to hedge $5,000,000 in variable rate debt, whose rate is set at LIBOR plus 10 bp.
Golden Corporation invests in a 4.8% interest rate cap to hedge $5,000,000 in variable rate debt, whose rate is set at LIBOR plus 10 bp. For the 6-month period ending December 31, 2016, LIBOR is 5%. For this same period, the cap's market value increases by $6,000.
How much does Golden receive in cash to settle the cap for the 6-month period ending December 31, 2016?
a)$ 7,500
b)$ 15,000
c)$ 117,500
d)$ 125,000
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