If a Company That Had a Floating-Rate Liability Wanted to Enter

question 30

Multiple Choice

If a company that had a floating-rate liability wanted to enter into a swap to achieve a fixed-rate cost of funds,it would pay a:

• A) fixed rate to the counterparty and receive a floating rate in return from the counterparty.
• B) floating rate to the counterparty and pay a floating rate to the fixed-rate lender.
• C) floating rate to the counterparty and pay a fixed-rate to the fixed-rate lender.
• D) floating rate to the counterparty and receive a fixed-rate in return from the counterparty.

---

Definitions:

Defective parts

Components or units that fail to meet the quality standards or specifications.

Sample size

The number of observations or data points collected from a population for a study.

Confidence interval

A set of values obtained from sample data which probably encompasses the value of an unspecified population parameter.

Average hourly income

The mean income earned by an individual per hour of work.