Today is June X015. XYZ Pty Ltd wishes to obtain a fixed-rate loan for one year, commencing in September X015. The loan will be based on face value AUD 10 million in discount securities being issued.

The following information is available

FRA		Futures		Options
3M V 12M	7.22/12	Jun-15	92.00	One year cap at 7.03%
3M V15M	7.08/02	Sep-15	92.50	Premium $300,000
3M V 18M	6.92/82	Dec-15	92.75
		Mar-16	93.50
		Jun-16	93.75
		Sep-16	94.50

Calculate the compensation payment if a forward rate agreement is used, based on a settlement rate of 7.5%. Who is responsible for the payment of this compensation amount?

Select one:

a. 27,879.60 Bank Pays XYZ

b. 36,586.60 Bank Pays XYZ

c. 36,586.60 XYZ pays Bank

d. 27,879.60 XYZ Pays Bank