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USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 52

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Darden Industries has decided to borrow $25,000,000.00 for six months in two three-month issues. As the Treasurer, you are concerned that interest rates will rise over the next three months and the rate upon which the second payment will be based will be undesirable. (The amount of Darden's first payment will be known at origination.) To reduce the company's interest rate exposure, you decide to purchase a 3 * 6 FRA whereby you pay the dealer's quoted fixed rate of 4.5 percent in exchange for receiving three-month LIBOR at the settlement date. In order to hedge her exposure, the dealer buys LIBOR from McIntire Industries at its bid rate of 4 percent. (Assume a notional principal of $25,000,000.00 and that there are 60 days between month 3 and month 6.)
-Refer to Exhibit 15.15. Assuming that three-month LIBOR is 5.00 percent on the rate determination day, and the contract specified settlement in arrears at month 6, describe the transaction that occurs between the dealer and Darden.

Identify the difference between informational and normative social influences.

Explain the concept of deindividuation and its effects on individual behavior.

Understand the effects of group dynamics on decision-making, including groupthink, social loafing, and polarization.

Describe the investment model of relationships and factors influencing relationship commitment.

Definitions:

Apartments

Residential units within a building or complex that are owned or rented for living purposes.

Normal Good

An item whose demand grows when the income of consumers goes up, and diminishes when their income goes down.

Used Cars

Pre-owned vehicles that have had one or more retail owners, sold through various outlets including dealerships and private sales.

Input Production

The process of using resources (inputs) to create goods or services.