Consider a Situation Where the Duration of the Fixed Portion

question 79

Multiple Choice

Consider a situation where the duration of the fixed portion of a swap is greater than the floating portion of a swap.Which of the following statements is most correct?

• A)The fixed-rate payers gain when rates fall.
• B)The market value of fixed-rate payments will decrease by more than the market value of floating-rate payments when interest rates fall.
• C)The market value of fixed-rate payments will decrease by more than the market value of floating-rate payments when interest rates rise.
• D)The floating-rate payers gain when rates rise.

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Definitions:

Self-Efficacy

A belief in one's ability to succeed in specific situations or accomplish a task, which can play a major role in how goals, tasks, and challenges are approached.

Material Self

Refers to the aspect of self-concept that involves the physical and external objects and possessions that belong to or are associated with a person.

True Self

An individual's authentic and genuine personality, characteristics, and beliefs that are often believed to be at the core of one's inner being.

Low Self-Esteem

A state characterized by a lack of confidence and feeling badly about oneself.