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

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Definitions:

Splenius Capitus

A muscle located in the back of the neck, responsible for head rotation and extension.

Zygomaticus Major

The zygomaticus major is a facial muscle that extends from the zygomatic bone to the corners of the mouth, primarily involved in smiling.

Orbicularis Oculi

A circular muscle that surrounds the eye, responsible for closing the eyelids and contributing to facial expressions such as blinking and winking.

Occipitofrontalis

A muscle of the scalp that plays a role in facial expressions, such as raising the eyebrows.