Suppose the Quote for a Five-Year Swap with Semiannual Payments

question 53

Multiple Choice

Suppose the quote for a five-year swap with semiannual payments is 8.50-8.60 percent in dollars and 6.60-6.80 percent in euro against six-month dollar LIBOR.This means

• A)the swap bank will enter into a currency swap in which it would pay semiannual fixed-rate dollar payments of 8.50 percent against receiving semiannual fixed-rate euro payments of 6.80.
• B)the swap bank will enter into a currency swap in which it would pay semiannual fixed-rate euro payments of 6.60 percent against receiving semiannual fixed-rate dollar payments of 8.60.
• C)both a) and b)
• D)none of the above

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Definitions:

Product-Development Activities

The series of tasks involved in designing, creating, and bringing a new product to market.

Cash Flow Problems

Arise when an organization struggles to maintain sufficient cash inflows to meet its outgoing financial obligations.

Human Limitations

Refers to the natural constraints on what individuals can physically and mentally achieve.

Best Alternative

The most desirable option available to a person or entity when their first choice is not feasible.