XYZ Corporation Enters into a 6-Year Interest Rate Swap with a Swap

question 6

Multiple Choice

XYZ Corporation enters into a 6-year interest rate swap with a swap bank in which it agrees to pay the swap bank a fixed-rate of 9 percent annually on a notional amount of SF10,000,000 and receive LIBOR - ½ percent.As of the third reset date (i.e.mid-way through the 6 year agreement) ,calculate the price of the swap,assuming that the fixed-rate at which XYZ can borrow has increased to 10%.(Round your final answer to nearest SF and Do not round intermediate calculations)

• A) SF248,685
• B) SF900,000
• C) SF2,700,000
• D) SF7,300,000

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Definitions:

Appeal to Pity

A logical fallacy that attempts to win an argument by exploiting the opponent's feelings of pity or guilt rather than by logic or reason.

Disagreement

A situation where two or more parties hold differing views, opinions, or positions on a particular issue or topic.

Debate

A formal discussion on a particular topic in a public meeting or legislative assembly, in which opposing arguments are put forward.

Fallacy of Relevance

The premise is logically irrelevant, or unrelated, to the conclusion.