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Show work. A bank makes a $5 million 180-day pure discount loan at LIBOR of 9 percent. At the same time, however, it exercises an
Show work. A bank makes a $5 million 180-day pure discount loan at LIBOR of 9 percent. At the same time, however, it exercises an interest rate put that has a strike of 11 percent. Find the annualized rate of return on the loan. Ignore the cost of the put.
a. 9.34 percent
b. 11.47 percent
c. 9 percent
d. 11 percent
e. none of the above
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