When Initially Negotiating an Interest Rate Swap, a Principal Indicated

question 602

Multiple Choice

When initially negotiating an interest rate swap, a principal indicated his intention to assign it to a third party. In executing such a transfer:

• A) The principal is entitled to provide the name of the original counterparty to the transferee.
• B) The principal is entitled to provide the name of the transferee to the original counterparty.
• C) The principal should obtain the consent of the transferee before releasing its name.
• D) The principal should obtain the consent of the original counterparty before releasing its name to the transferee.

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Definitions:

Stock Dividends

These are dividends paid by a company to its shareholders in the form of additional shares of stock, rather than in cash.

Contributed Capital

Funds raised by a company through the issuance of shares to investors, representing the stockholders' equity apart from retained earnings.

Retained Earnings

The portion of net income left over for a business after it has paid out dividends to its shareholders, often used for reinvestment in the business or to pay down debt.

Small Stock Dividend

A dividend payment made in the form of additional shares, typically less than 25% of the existing shares.