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:

Ancestral Character

a trait or characteristic that was present in the common ancestor of a group of species and may be retained or altered in its descendants.

Hair

A thin strand of keratin that grows from the skin of mammals.

Shared Homologous Structures

Anatomical features that are similar in different species due to shared ancestry, indicating evolutionary relationships.

Taxa

Groups of one or more populations of organisms classified together, representing categories used in biological taxonomy such as species, genus, or family.