Which of the Following Describes the Five-Year Swap Rate

question 1

Multiple Choice

Which of the following describes the five-year swap rate?

• A) The fixed rate of interest which a swap market maker is prepared to pay in exchange for LIBOR on a 5-year swap
• B) The fixed rate of interest which a swap market maker is prepared to receive in exchange for LIBOR on a 5-year swap
• C) The average of A and B
• D) The higher of A and B

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Definitions:

World Price

The price at which goods are traded internationally, determining how much a product costs across different countries.

Free Trade

Free trade is the unrestricted exchange of goods and services between countries without tariffs, quotas, or other trade barriers.

Domestic Supply

Refers to the total amount of goods and services produced within a country's borders, available for domestic consumption and export.

Demand Schedules

Tables that show the relationship between the price of a good and the quantity demanded by consumers at those prices, typically illustrating the law of demand.