The callable annuity rate can be calculated as:
A) × Hurdle Rate
B) × Hurdle Rate
C) × Cost of Capital

Question

The callable annuity rate can be calculated as:
A) × Hurdle Rate 
B) × Hurdle Rate 
C) × Cost of Capital

Quizplus · Accepted Answer

The callable annuity rate can be calculated as the product of the spread over a benchmark rate (in this case, the 11ea7ff7_a4fb_6614_846e_6ba19836d304_TB2790_11) and the hurdle rate. Therefore, the correct formula is 11ea7ff7_a4fb_6614_846e_6ba19836d304_TB2790_11 x Hurdle Rate, which corresponds to choice B.

The Callable Annuity Rate Can Be Calculated As