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Posted on Oct 06, 2024

MN National Bank make the following interest rate collar: 10 millions, 9.75% interest rate cap with a price of 1.65% of face value 10 millions,

MN National Bank make the following interest rate collar:

10 millions, 9.75% interest rate cap with a price of 1.65% of face value

10 millions, 3.5% interest rate floor with a price of 1.275% of face value

If at expiration interest rates are 10.25%, how much is the profit/(loss) of MN National Bank?

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