A Company Enters into an Interest Rate Swap Where It

question 2

Multiple Choice

A company enters into an interest rate swap where it is paying fixed and receiving LIBOR.When interest rates increase,which of the following is true?

• A) The value of the swap to the company increases
• B) The value of the swap to the company decreases
• C) The value of the swap can either increase or decrease
• D) The value of the swap does not change providing the swap rate remains the same

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Definitions:

Utilitarianism

A philosophical theory that suggests the best action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.

Toxic Environment

Conditions in a workplace or other environment that are harmful to employees' or inhabitants' health, well-being, or performance, often due to dangerous chemicals or a hostile work culture.

Whistleblowing

The act of exposing wrongful, unethical, or illegal activities within an organization to those in authority or the general public.

Goodwill

An intangible asset reflecting the value of a business above its tangible assets and liabilities, often associated with its brand, customer base, and reputation.