A 5-Year Swap Contract Can Be Viewed as a Portfolio

question 19

Multiple Choice

A 5-year swap contract can be viewed as a portfolio of 5 forward contracts with maturities of 1, 2, 3, 4 and 5 years. One important exception is that

• A)the forward price is the same for the swap contract but not for the forward contracts.
• B)the swap contract will have daily resettlement.
• C)the forward contracts will have resettlement risk.
• D)none of the above.

---

Definitions:

Manufacturing Cycle Efficiency

The ratio of value-added time to total throughput time in a manufacturing process, measuring the efficiency of production.

Fill Orders

The process of completing customer requests for goods by preparing and dispatching products.

Manufacturing Cycle Efficiency

A measure of the efficiency of the production process, calculated as the value-added time divided by the total throughput time.

Fill Orders

The process of completing a customer's purchase request by preparing and dispatching the requested goods.