Chameleon Ltd Has a Fixed Interest Rate Borrowing of $1

question 43

Multiple Choice

Chameleon Ltd has a fixed interest rate borrowing of $1 million at 10% p.a.for five years and wishes to swap to a floating rate loan.In the swap,Chameleon pays the fixed interest payment of $100 000 on the loan and the final balloon payment.It agrees to pay a financial intermediary a variable amount at the bank-accepted bill interest rate on the $1 million and the financial intermediary pays Chameleon a fixed rate of 10% p.a.What is the result of this swap by Chameleon?

• A)Chameleon has effectively borrowed $1 million at the bank-accepted bill rate.
• B)Chameleon has effectively borrowed $1 million at the fixed interest rate.
• C)Chameleon has effectively borrowed $100 000 at the bank-accepted bill rate.
• D)Chameleon has effectively borrowed $100 000 at the fixed interest rate.

---

Definitions:

Substance Use Disorder

A problem characterized by loss of control over usage, social impairment, risky use, and tolerance and withdrawal symptoms.

Oppositional Defiant Disorder

A psychological disorder characterized by a persistent pattern of defiant, disobedient, and hostile behavior towards authority figures.

Impulse Control

The ability to resist or delay an impulse, drive, or temptation to act.

Rapid Eye Movement

A phase of sleep characterized by rapid movements of the eyes, low muscle tone, and the propensity to dream vividly.