Suppose You Have a Floating Rate Loan Tied to 90-Day

Multiple Choice

Suppose you have a floating rate loan tied to 90-day LIBOR and have hedged the interest rate risk with an interest rate cap.The effective annual rate actually paid on the loan with the cap is found using a methodology equivalent to

A) computing the Black-Scholes-Merton option call price
B) computing the net present value
C) computing the internal rate of return
D) computing the Black commodity option call price
E) computing the WACC