USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 59

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. Assuming that one year after the swap was initiated the fixed rate on a new three-year receive fixed pay floating LIBOR swap has fallen to 7 percent per year, calculate the market value of the 8 percent fixed rate bond based on a $100 face value. Settlement is on a semiannual basis.

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

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Definitions:

Functionalism

A theoretical perspective in sociology and anthropology that interprets and evaluates society as a complex system whose parts work together to promote solidarity and stability.

Symbolic Interactionism

A sociological perspective focusing on the symbolic meaning that people develop and rely upon in the process of social interaction.

Dramaturgical Sociology

A perspective in sociology, introduced by Erving Goffman, that likens social life to a theatrical performance where individuals present themselves in ways that will be accepted by others.

Scientific Method

A systematic and empirical method of investigation involving observation, hypothesis formation, experimentation, and conclusion to acquire or refine knowledge.