A Firm Can Borrow at Fixed AA Rates for Long-Term

question 22

Multiple Choice

A firm can borrow at fixed AA rates 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% and the fixed rate is 1%?

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

---

Definitions:

Nerve Impulse

Propagation of an action potential on the membrane of an axon.

Amyotrophic Lateral Sclerosis

A progressive neurodegenerative disease that affects nerve cells in the brain and the spinal cord, leading to loss of muscle control.

Neural Structures

Complex networks within the nervous system made up of neurons and other cells that support neuron function.

Multiple Sclerosis

A chronic autoimmune disease affecting the central nervous system, leading to demyelination, inflammation, and often, neurological disabilities.