
Explanation:
Hence,
\frac{(\`$56`m - \`$22`m)}{\`$56`m} \times 0.38 \times 0.00075 = 0.000173 \approx 1.73 \text{ bps}Ultimate access to all questions.
Q.4201 Calculate the rate charged for contingent liquidity risk of a line of credit assumed to have a limit of $56 million where $22 million has already been drawn. Further, suppose there is a 38% chance that the customer will draw on the remaining credit and that the cost of term funding assets in the liquidity cushion is 7.5 bps.
A
1.73 bps
B
2.85 bps
C
4.40 bps
D
2.71 bps
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