Miami mutual bank* purchases a two-year interest rate cap for a fee of 3 percent of notional principal valued at $10 million, with an interest rate ceiling of 11 percent and libor as the index representing the market interest rate. at the same time, miami mutual sells a two-year floor (8 percent) for a fee of 2 percent of the $10 million principal. assume that libor is expected to be 7 percent and 14 percent at the end of each of the next two years, respectively. what is this type of strategy called? also what dollar amount do miami mutual bank stand to gain or lose from this strategy?

1. what is the amount of interest earned after two years on a $100 deposit paying 4 percent simple interest annually? $8.00 $4.08 $8.16 $4.00 2. what is the amount of compound interest earned after three years on a $100 deposit paying 8 percent interest annually? $24.00 $8.00 $16.64 $25.97 3. a business just took out a loan for $100,000 at 10% interest. if the business pays the loan off in three months, how much did the business pay in interest? $2,500.00 $10.00 $250.00 $10,000.00 4. what is the annual percentage yield (apy) for a deposit paying 5 percent interest with monthly compounding? 5.00% 5.12% 79.59% 0.42%