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A company has arranged an interest rate cap with a bank, with a strike rate of 5%. The notional principal is $7 million. For one particular six-month interest period, the LIBOR reference rate is 6.2%. Assuming an interest period of 180 days and a year of 360 days, what will be the payment under the cap agreement for this interest period? A. $41,015.63 B. $42,000.00 C. $40,776.70 D. There will be no payment. |