|
|
Assume a customer is borrowing $5 million for five years at a floating rate of one month LIBOR plus the company's credit spread. The customer wishes to cap the LIBOR component of its interest expense at 8.00% over the five year life of the loan. In return for an up-front payment of $100,000, the customer purchases a five year 8.00% one month LIBOR cap on a $5 million notional amount.
|
