Which of the Following Is True for the Party Paying

question 13

Multiple Choice

Which of the following is true for the party paying fixed in a newly negotiated interest rate swap when the yield curve is upward sloping?

• A)The early forward contracts underlying the swap have a positive value and the later ones have a negative value
• B)The early forward contracts underlying the swap have a negative value and the later ones have a positive value
• C)The swap is designed so that all forward rates have zero value
• D)Sometimes A is true and sometimes B is true

---

Definitions:

Demand Curve

Relationship between the quantity of a good that consumers are willing to buy and the price of the good.

Price Increase

A rise in the cost of goods or services.

Snow Storm

A weather event characterized by heavy snowfall and often leading to significant disruptions, such as transportation delays and infrastructure damage.

Perceived Importance

The level of significance or value that an individual or group assigns to a particular item, issue, or activity.