When an Interest-Only Swap Is Established on an Amortizing Basis

question 82

Multiple Choice

When an interest-only swap is established on an amortizing basis

• A)the debt service exchanges decrease periodically through time as the hypothetical notational principal is amortized.
• B)the debt service exchanges are the same each year, but the level of interest and principal changes as the loans amortize.
• C)there is no such thing as an amortizing interest-only swap.
• D)none of the above

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Definitions:

Frequencies

Describes the number of times an event occurs within a specified period of time.

Outer Space

The physical universe beyond the earth's atmosphere, characterized by a vacuum and extreme temperatures.

Frequency

The number of occurrences of a repeating event per unit of time, often used to measure the waves of sound and light.

Sound Wave

A wave of compression and rarefaction, by which sound is propagated in an elastic medium such as air.