An Agreement to Exchange Interest Payments Based on a Fixed

question 14

Multiple Choice

An agreement to exchange interest payments based on a fixed payment for those based on a variable rate (or vice versa) is known as a/an:

• A) forward rate agreement.
• B) interest rate future.
• C) interest rate swap.
• D) none of the above

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Definitions:

Geometric Sequence

An array of numbers wherein each element, after the first, is calculated by multiplying the previous element by a stable, non-zero quantity referred to as the common ratio.

First Five Terms

Denotes the initial five elements or numbers in a sequence or series.

Geometric Sequence

A succession of numbers where, from the second element onwards, each number is derived by multiplying its precursor by a steady, non-zero coefficient known as the common ratio.

Nth Term

The term that appears in a sequence's nth position, often defined by a formula that relates the term's position in the sequence to its value.