Exhibit 23.7 Use the Information Below for the Following Problem(S)

question 31

Multiple Choice

Exhibit 23.7
Use the Information Below for the Following Problem(S)
The WallMal Company has entered into a 4-year interest rate swap, with semiannual settlement, to pay a fixed rate of 8% per year and receive 6-month LIBOR. The notional principal is $50,000,000.
-Refer to Exhibit 23.7.Assume that one year after the swap was initiated the fixed rate on a new 3-year receive fixed pay floating LIBOR swap has risen to 9% per year,calculate the market value of the 8% fixed rate bond based on $100 face value.Settlement is on a semiannual basis.

• A) $76.45
• B) $101.24
• C) $100.0
• D) $97.42
• E) $70.77

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Definitions:

U.S. Bonds

Debt securities issued by the United States Department of the Treasury to finance government spending as an alternative to taxation.

NX

Stands for Net Exports, which is the difference between a country's total value of exports and total value of imports.

Equations

Mathematical statements that assert the equality of two expressions, often used in modeling relationships in various sciences.

Real Return

The return on an investment after adjusting for inflation, reflecting the actual purchasing power of the amount returned.