Consider a $100 Fixed Notional,equity for Libor Swap,where the Stock $- 2.16$

question 17

Multiple Choice

Consider a $100 fixed notional,equity for Libor swap,where the stock price at inception was $35.Two years later,on the stock price was $40.The swap is based on semi-annual payments on both legs,with an ACT/360 convention for the Libor leg.Assume that the number of days in the next period is 183,and the six-month Libor rate was 10%.Of these 92 have elapsed.The 91-day Libor rate for the remaining period is 9% and the stock price is $41.What is the value of the swap from the point of view of the receiver of equity return?

• A) \(- 2.16\)
• B) \(- 4.66\)
• C)Zero.
• D) \(+ 4.66\)

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Definitions:

U.S. Net Capital Outflow

Represents the difference between the purchase of foreign assets by U.S. citizens and the purchase of U.S. assets by foreigners in a given period.

International Trade

The exchange of goods and services between countries.

International Finance

International finance is the study of monetary interactions that occur between two or more countries, focusing on areas such as foreign exchange markets, international monetary systems, and cross-border investment flows.

Net Exports

The value of a country's total exports minus its total imports, representing the balance of trade.