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

question 29

Multiple Choice

Suppose the quote for a five-year swap with semiannual payments is 8.50-8.60 percent.This means

• A)the swap bank will pay semiannual fixed-rate dollar payments of 8.50 percent against receiving six-month dollar LIBOR.
• B)the swap bank will receive semiannual fixed-rate dollar payments of 8.60 percent against paying six-month dollar LIBOR.
• C)both a) and b)
• D)none of the above

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Definitions:

Type A Personality

A temperament characterized by high levels of competitiveness, impatience, aggression, and a constant sense of urgency.

Competitive

The trait of being inclined to strive for success or superiority over others, often motivated by the desire to win or be the best at something.

General Adaptation Syndrome

A theoretical model describing the body's stress response in three stages: alarm, resistance, and exhaustion.

Exhaustion Phase

The exhaustion phase is the final stage of the General Adaptation Syndrome, where the body's resources are depleted following prolonged exposure to stress, leading to decreased stress tolerance and possible health issues.