Consider a Pension Fund Manager That Wishes to Convert $10

question 13

Multiple Choice

Consider a pension fund manager that wishes to convert $10 million from notes paying LIBOR to stocks,using an equity swap.The equity swap should be structured so that

• A) Pension fund receives LIBOR and pays an equity return based on notional principal of $5 million.
• B) Pension fund pays LIBOR and receives an equity return based on notional principal of $5 million.
• C) Pension fund receives LIBOR and pays an equity return based on notional principal of $10 million.
• D) Pension fund pays LIBOR and receives an equity return based on notional principal of $10 million.
• E) None of the above.