USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 95

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 15.159 Assume that one year later the fixed rate on a new three-year receive fixed pay floating LIBOR swap has risen to 9 percent per year. Settlement is on a semiannual basis. Calculate the market value of the FRN based on $100 face value.

• A) $97.42
• B) $100.00
• C) $92.56
• D) $99.63
• E) $75.77

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Definitions:

Cost Drivers

Factors that cause a change in the cost of an activity, such as machine hours, labor hours, or material size.

Vocational School

An educational institution that provides training and skills for specific trades or careers, focusing on practical job-related skills.

Revenue Variances

The difference between actual revenue and budgeted or forecasted revenue, indicating if a business is performing above, on, or below expectations.

Spending Variances

Differences between actual spending and budgeted amounts in a company's budget, indicating over or underspending.