Bank A has a funding cost of basis points,where is Libor.Bank B has funding cost of basis points.There is a reference obligation currently yielding basis points.In a "Funding Cost Arbitrage," Bank A pays B the total return on the reference obligation in exchange for a payment of basis points by Bank B,where:
A) The value of
Must lie between 10 and 60
B) The value of
Must lie between 10 and 80
C) The value of
Must lie between 60 and 140
D) The value of
Must lie between 80 and 140
Correct Answer:
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