Consider a Pension Fund Manager Who Wishes to Convert $10

question 79

Multiple Choice

Consider a pension fund manager who wishes to convert $10 million from notes paying LIBOR to stocks using an equity swap. The equity swap should be structured so that

• A) pension fund receives LIBOR and pays an equity return based on a notional principal of $5 million.
• B) pension fund pays LIBOR and receives an equity return based on a notional principal of $5 million.
• C) pension fund receives LIBOR and pays an equity return based on a notional principal of $10 million.
• D) pension fund pays LIBOR and receives an equity return based on a notional principal of $10 million.
• E) pension fund pays LIBOR and receives an equity return based on a notional principal of $15 million.

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Definitions:

Apparel

Clothing of any kind, including outfits and garments worn by individuals for comfort, protection, or fashion.

Pharmaceuticals

Drugs and medical products developed for the treatment, prevention, or diagnosis of diseases and medical conditions.

Pet Supplies

Items and products specifically designed and sold for the care, entertainment, or maintenance of pets.

Insurance Products

Financial products provided by insurance companies designed to protect against risk, such as life, health, and property insurance.