Exhibit 23.8 Use the Information Below for the Following Problem(S)

Multiple Choice

Exhibit 23.8
Use the Information Below for the Following Problem(S)
An international investment firm buys an interest rate cap that pays the difference between LIBOR and 6% if LIBOR exceeds 6%. Current LIBOR is 5%. The amount of the option is $1,500,000, and the settlement is every 3 months. Assume a 360 day year.
-Refer to Exhibit 23.8.Find the payoff if LIBOR closes at 4.7%.

A) -$45,000
B) -$11,250
C) $0
D) $11,250
E) $45,000