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

---

Definitions:

Capital Acquisitions Ratio

A measure used to evaluate a company's ability to fund its investment in fixed assets using cash from operating activities.

Outside Financing

Outside financing is the capital a company raises from external sources, such as bank loans, private investors, or public offerings, to fund its operations, growth, and investments.

Operating Activities

Business activities directly related to the production and delivery of goods and services, which are the main revenue-producing activities of an enterprise.

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period.