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

question 57

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 8.60 percent against receiving six-month dollar LIBOR
• B)the swap bank will receive semiannual fixed-rate dollar payments of 8.50 percent against paying six-month dollar LIBOR.
• C)if the swap bank is successful in getting counterparties to both legs of the swap at these prices,he will have an annual profit of ten basis points.
• D)none of the options

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Definitions:

False Information

Incorrect or misleading data presented as fact, which can have legal consequences if used for deceit.

Recklessly

Acting with a disregard for the safety of others, knowing there is a significant and unjustifiable risk but proceeding anyway.

American Trucking Company

This term refers to any company operating within the United States that is engaged in the business of transporting goods via trucks, though it may not denote any specific entity.

Injured

Refers to a person or entity that has suffered harm or loss, whether physically, financially, or emotionally, often used in legal contexts.