Which of the Following Is a Way of Valuing Interest

question 14

Multiple Choice

Which of the following is a way of valuing interest rate swaps where LIBOR is exchanged for a fixed rate of interest?

• A) Assume that floating payments will equal forward LIBOR rates and discount net cash flows at the risk-free rate
• B) Assume that floating payments will equal forward OIS rates and discount net cash flows at the risk-free rate
• C) Assume that floating payments will equal forward LIBOR rates and discount net cash flows at the swap rate
• D) Assume that floating payments will equal forward OIS rates and discount net cash flows at the swap rate

---

Definitions:

Classy Swimsuit

A type of swimwear that is elegant and stylish, typically designed with sophistication in mind.

Champs-Elysées

A distinguished avenue in Paris, France, known for its theatres, cafés, and luxury shops, making it one of the world's most famous and recognizable streets.

Post-Decisional Conflict

The dissonance associated with behaving in a counter-attitudinal way. Dissonance can be reduced by bringing the attitude into line with the behaviour.

Lotto Tickets

Paper or electronic slips purchased to participate in a lottery, offering a chance to win various prizes based on randomly drawn numbers.