Which of the Following Factors Does Not Affect the Valuation

question 22

Multiple Choice

Which of the following factors does not affect the valuation of a variable notional equity swap that pays the equity return in exchange for Libor?

• A)Expected equity price growth.
• B)Equity volatility.
• C)Interest-rate term structure.
• D)All of the above.

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Definitions:

Business Loan

Financing that businesses seek and receive to help with expenses, growth, or other financial needs, typically from a banking institution or lender.

Fixed-rate Loan

A loan where the interest rate remains constant throughout the term of the loan, regardless of market fluctuations.

Variable-rate Loan

A loan where the interest rate can change over time, typically based on prevailing market interest rates or a benchmark index.

Term Insurance Policies

Life insurance policies that provide coverage at a fixed rate of payments for a limited period of time.