A $100 million loan with a haircut of four percent requires collateral valued at ________.

Question

Quizplus · Accepted Answer

A haircut of four percent means that the lender will only provide a loan of 96% of the collateral value. To calculate the collateral value needed for a $100 million loan with a four percent haircut, we need to divide $100 million by 0.96. The result is $104.17 million, which rounded to the nearest million is $104 million. Therefore, the correct answer is A.

A $100 Million Loan with a Haircut of Four Percent