A Firm with Fixed-Rate Debt That Expects Interest Rates to Fall

question 31

Multiple Choice

A firm with fixed-rate debt that expects interest rates to fall may engage in a swap agreement to:

• A) pay fixed-rate interest and receive floating rate interest.
• B) pay floating rate and receive fixed rate.
• C) pay fixed rate and receive fixed rate.
• D) pay floating rate and receive floating rate.

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Definitions:

Severance

An owner’s removal of chattel that he has affixed; separation or division of joint ownership; action by one of the co-owners that is inconsistent with joint tenancy.

Joint Ownership

Shared ownership of property by two or more parties where all owners have equal rights and obligations regarding the property.

Right Of Way

A type of easement that allows the crossing of another’s land.

Prescription

An authorized written instruction from a medical practitioner for the preparation and administration of a medicine or medical device.