Which of the Following Is a Five-Year Interest Rate Swap

question 12

Multiple Choice

Which of the following is a five-year interest rate swap that can be canceled at the two year point?

• A) The difference between two plain vanilla interest rate swaps
• B) The difference between a plain vanilla interest rate swap and a forward start swap
• C) A regular interest rate swap plus a European swap option
• D) A regular interest rate swap plus a Bermudan swap option

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Definitions:

Creative Deviance

The act of intentionally deviating from norms to produce novel and useful ideas or products.

Idea Generation

The process of creating, developing, and communicating new thoughts or concepts.

Diffusion

The process through which new ideas, practices, or products spread within a society or from one society to another.

Tolerate Uncertainty

The ability to remain calm and maintain performance despite ambiguity or lack of information about future events.