Suppose a money market investor, a large, nonfinancial corporation, has a $10 million cash surplus expected to last for 36 days. The corporation has been approached by a government security dealer in need of funds about a collateralized $10 million loan that can be repaid at any time on 24 hours' notice, at a 10 percent annual yield. How much interest income can the corporation expect if it goes ahead and makes the loan to the dealer for 36 days?
A) $20,000
B) $50,000
C) $100,000
D) $120,000
E) $150,000
F) $180,000
G) $200,000
H) None of the above
Correct Answer:
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