Which of the Following Is a Way of Valuing Interest

question 14

Multiple Choice

Which of the following is a way of valuing interest rate swaps where LIBOR is exchanged for a fixed rate of interest?

• A) Assume that floating payments will equal forward LIBOR rates and discount net cash flows at the risk-free rate
• B) Assume that floating payments will equal forward OIS rates and discount net cash flows at the risk-free rate
• C) Assume that floating payments will equal forward LIBOR rates and discount net cash flows at the swap rate
• D) Assume that floating payments will equal forward OIS rates and discount net cash flows at the swap rate

---

Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, typically measured by GDP.

Environmental Integrity

The maintenance of the world's physical, biological, and chemical environments to sustain ecosystem health and function.

Centenarians

People who have reached the age of 100 years or older, a milestone achieved by a small fraction of the population.

Ecological Footprint

An estimation of the land and water area required to produce all the goods an individual consumes and to assimilate all the waste an individual generates.