A Firm Can Borrow at Fixed AA Rates Minus 1

question 11

Multiple Choice

A firm can borrow at fixed AA rates minus 1% for long-term loans.If it swaps its long-term payments so that it receives the fixed AA rate and pays a AA floating rate,what is the rate of interest on its borrowing if the floating rate is r%?

• A)r + 1%
• B)r - 1%
• C)r%
• D)1%
• E)2%

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Definitions:

Prosumer

A portmanteau of producer and consumer, indicating individuals who produce some of the goods and services entering their consumption.

Consumer

An individual who purchases goods and services for personal use from the available offerings in the market.

Deterritorialization

A concept in socio-cultural studies that refers to the weakening of the ties between culture and geographical location, often as a result of globalization.

Machinic Assemblage

A concept from Deleuze and Guattari referring to a complex arrangement of interconnected entities or machines, both literal and metaphorical, that produce desire or social order.