24-82 Assume That the Swap Is for Two Years and That

question 28

Multiple Choice

24-82 Assume that the swap is for two years and that LIBOR is 5.25 percent in year one and 6.25 percent in year two.What will be the net swap cash flow each year if the notional value of a swap is $100 million?

• A)The thrift pays $0.75 million to the bank in year one and receives $0.25 million from the bank in year two.
• B)The thrift receives $0.75 million from the bank in year one and pays $0.25 million to the bank in year two.
• C)The thrift pays $0.25 million to the bank in year one and receives $0.75 million from the bank in year two.
• D)The thrift receives $0.25 million from the bank in year one and pays $0.75 million to the bank in year two.
• E)None of the above.

---

Definitions:

Marcel Duchamp

A French-American artist associated with Dadaism and Surrealism, known for challenging traditional notions of art.

Giorgio de Chirico

An Italian artist known for his metaphysical painting phase, creating dream-like, eerily quiet urban landscapes that influenced the surrealist movement.

The Song of Love

A painting by Giorgio de Chirico in 1914, showcasing the metaphysical art style.

Surrealism

A successor to Dada, Surrealism incorporated the improvisational nature of its predecessor into its exploration of the ways to express in art the world of dreams and the unconscious. Biomorphic Surrealists, such as Joan Miró, produced largely abstract compositions. Naturalistic Surrealists, notably Salvador Dalí, presented recognizable scenes transformed into a dream or nightmare image.