You Enter into a Two-Year Variable Notional Swap of Equity

question 8

Multiple Choice

You enter into a two-year variable notional swap of equity returns for 6-month Libor with semi-annual payments on both legs.The initial swap notional is $100 million,the Libor rate at inception of the swap is 7.2%,and the realized raw equity returns during the first 6-month period is 6.3%.The first 6-month period has 183 days.The notional principal of the swap entering the second 6-month period is

• A)$103.15 million.
• B)$103.20 million.
• C)$103.66 million.
• D)$106.3 million.

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Definitions:

Profane

Concerned with the ordinary, mundane, or worldly, as opposed to that which is considered sacred or holy.

Collective Conscience

The set of shared beliefs, ideas, and moral attitudes that operate as a unifying force within society.

Everyday Lives

The daily experiences, routines, and activities of individuals within a society, focusing on personal and social interactions.

Collective Effervescences

A term coined by Emile Durkheim to describe moments of intense collective emotional bonding and energy among groups.