When LIBOR Is Used as the Discount Rate

question 14

Multiple Choice

When LIBOR is used as the discount rate:

• A)The value of a swap is worth zero immediately after a payment date
• B)The value of a swap is worth zero immediately before a payment date
• C)The value of the floating rate bond underlying a swap is worth par immediately after a payment date
• D)The value of the floating rate bond underlying a swap is worth par immediately before a payment date

---

Definitions:

Knowledge

Facts, information, or skills acquired through experience or education; the theoretical or practical understanding of a subject.

Trust

The belief in the reliability, truth, ability, or strength of someone or something, fundamental to building and maintaining social relationships.

Parasocial Relationships

Individuals’ relationships with people in the media, including celebrities, television characters, and athletes.

Interdependence

A mutual reliance between two or more parties, often seen in ecosystems, economies, and social relationships.