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:

Vapor Phase

The state of a substance when it is in gas form, especially when it coexists with its liquid or solid phase.

Avogadro's Law

States that equal volumes of gases at the same temperature and pressure contain the same number of molecules.

Equal Volumes

Describes when two or more substances occupy the same amount of space, despite possibly having different shapes or forms.

Balanced Chemical Equation

A symbolic representation of a chemical reaction in which the number of atoms for each element is equal on both the reactant and product sides.