Which One of the Following Formulae Is Correct

question 83

Multiple Choice

Which one of the following formulae is correct?

• A) Long a straight bond + pay fixed on a swap = long a synthetic Floating Rate Note
• B) Long a straight bond + pay floating on a swap = long a synthetic Floating Rate Note
• C) Short a straight bond + receive fixed on a swap = long a synthetic Floating Rate Note
• D) Short a straight bond + pay fixed on a swap = long a synthetic Floating Rate Note

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Definitions:

Purchase Method

An accounting technique used in mergers and acquisitions where the buyer records the assets and liabilities of the acquired company at fair market value.

Book Value

The net value of a company's assets found on its balance sheet, and calculated as total assets minus intangible assets (patents, goodwill) and liabilities.

Market Value

The current price at which an asset or service can be bought or sold in the market.

Total Assets

Represents the sum of all funds, properties, and assets owned by a company or individual at a given time.