Consider an Equity Swap of the Equity Index Return Versus

question 10

Multiple Choice

Consider an equity swap of the equity index return versus six-month Libor.The current equity index is at 1100.The six-month Libor rate is currently 11.50%.There are 184 days in the given six month period.What should be the level of the index in 6 months for the net payment in six months to be zero?

• A)1100.
• B)1165
• C)1227
• D)1422

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services delivered or used but not yet paid for.

Operating Cycle

The duration between the acquisition of inventory and the collection of cash from receivables, indicating the time needed to sell inventory and collect cash.

Inventory

The cumulative quantity of products and materials in a company's possession intended for either direct sale or use in manufacturing.

Accounts Receivable

Accounts receivable represents the money owed to a company by its customers for goods or services delivered but not yet paid for.