USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 106

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The WallMal Company has entered into a four-year interest rate swap, with semiannual settlement, to pay a fixed rate of 8 percent per year and receive six-month LIBOR. The notional principal is $50,000,000.
-Refer to Exhibit 15.19. Assume that one year later the fixed rate on a new three-year receive fixed pay floating LIBOR swap has fallen to 7 percent per year. Settlement is on a semiannual basis. Calculate the market value of the FRN based on $100 face value.

• A) $102.66
• B) $100.00
• C) $95.56
• D) $89.63
• E) $70.77

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Definitions:

Business Misconduct

Inappropriate, unethical, or illegal actions conducted by individuals or entities in the context of their business operations.

Business Ethics

The principles and standards that determine acceptable conduct in business organizations.

Business Ethics

The study of appropriate business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, and social responsibility.

Stock Value

The monetary amount that a share of a specific stock is considered to be worth in the marketplace.