Brown Inc needs to borrow $250,000 for the next 6 months. The company has a line of credit with a
bank that allows the company to borrow funds with an 8% interest rate subject to a 20% of loan
compensating balance.
Currently, Brown Inc has no funds on deposit with the bank and will need
the loan to cover the compensating balance as well as their other financing needs. What is the
annual percentage rate for this financing assuming discounted interest?
A) 14.29% B) 11.67% C) 10.53% D) 12.98%
C
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Which of the following statements regarding a stock insurer is NOT true?
A) It is owned by shareholders. B) The operations are overseen by a board of directors. C) The policies are participating policies. D) Profits may be distributed as dividends."
A stock is selling for $18.50. The strike price on a call, maturing in 6 months, is $20. The possible stock prices at the end of 6 months are $22.50 and $15.00. Interest rates are 6.0%
How much money would you borrow to create an arbitrage on a call trading for $2.00? A) $2.54 B) $4.85 C) $6.60 D) $8.85