XYZ Corporation Enters into a 6-Year Interest Rate Swap with a Swap

question 94

Multiple Choice

XYZ Corporation enters into a 6-year interest rate swap with a swap bank in which it agrees to pay the swap bank a fixed-rate of 9 percent annually on a notional amount of SFr10,000,000 and receive LIBOR - ½ percent. As of the third reset date (i.e. mid-way through the 6 year agreement) , calculate the price of the swap, assuming that the fixed-rate at which XYZ can borrow has increased to 10%.

• A)SFr248,685
• B)SFr900,000
• C)SFr2,700,000
• D)SFr7,300,000

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Definitions:

Predictive Events

Occurrences or signals that indicate the likely onset of another event or condition.

Surprising Events

Events that are unexpected and can have significant impacts on our psychological state or behavior.

AESOP Model

A theoretical framework or model, but without specific contextual details provided, it is difficult to determine its precise focus or application. NO.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, triggers a conditioned response.