Business, 24.11.2020 19:50 Katy3613

Suppose that Florida Bank has recently granted a loan of $2 million to Oyster Farms at LIBOR plus 0.5 percent for six months. In return for granting Oyster Farms an interest-rate cap of 6.5 percent on its loan, this bank has received from this customer a floor rate on the loan of 5 percent. Suppose that, as the loan is about to start, LIBOR declines to 4.25 percent and remains there for the duration of the loan. How much (in dollars) will Oyster Farms have to pay in total interest on this six-month loan with floor and without floor?How much in interest rebates will Oyster Farms have to pay due to the fall in LIBOR?

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Suppose that Florida Bank has recently granted a loan of $2 million to Oyster Farms at LIBOR plus 0....

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