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Level II
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Derivatives
Derivatives
Medium
Thornfield Manufacturing borrows $100 million at SOFR + 150bp with quarterly resets. To protect against rising rates, Thornfield purchases a 4.5% interest rate cap. If SOFR resets at 5.2% for a 90-day period, the caplet payoff is closest to:
A
$175,000
B
$700,000
C
$250,000
D
$1,300,000
Select an answer to continue
Tags
#interest-rate-cap
#caplet
#hedging
#sofr
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