USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 16

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
The Skalmory Corporation has entered into a three-year interest rate swap, with semiannual settlement, to pay a fixed rate of 7.5 percent per year and receive six-month LIBOR. The notional principal is $10,000,000.
-Refer to Exhibit 15.17. Assuming that one year after the swap was initiated the fixed rate on a new two-year receive fixed pay floating LIBOR swap has fallen to 7 percent per year, calculate the market value of the 7.5 percent fixed rate bond based on a $100 face value. Settlement is on a semiannual basis.

• A) $101.33
• B) $100.92
• C) $100.00
• D) $98.67
• E) $95.83

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Definitions:

Global Factor

An overarching element or influence that affects multiple aspects or areas simultaneously.

Severe Depression

A significant mental health condition characterized by persistent feelings of sadness, hopelessness, and a lack of interest or pleasure in activities, significantly impairing daily functioning.

Internal

Refers to something situated on the inside or occurring within an entity or organization.

Stable Factors

Characteristics or elements that remain constant over time in a given context or system.