USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 106

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. Assume that one year later the fixed rate on a new three-year receive fixed pay floating LIBOR swap has fallen to 7 percent per year. Settlement is on a semiannual basis. Calculate the market value of the FRN based on $100 face value.

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

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Definitions:

Formal Policy Statement

An official document that outlines an organization's policies, procedures, and guidelines on specific issues.

Public Accountability

The obligation of organizations or individuals to explain their decisions and actions to the public and to take responsibility for them.

Organizational Stakeholders

Individuals or groups that have an interest or concern in the performance and decisions of an organization, such as employees, customers, suppliers, and investors.

Role Senders

Individuals or groups that have expectations about the behavior and performance of others in specific positions.