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:

Goodwill Impairment

A reduction in the book value of goodwill, which occurs when the carrying amount of goodwill exceeds its fair value, indicating that the asset is not as valuable as previously thought.

Reporting Units

Segments or components of a business for which discrete financial information is available and reviewed by the operating segment's management.

Equity Method

An accounting technique used by a company to record its investment in another company, where the investment's value is adjusted in accordance with the investee's performance.

Partial Equity Method

An accounting method used for investments, where the investor recognizes its share of the investee's earnings, but adjustments are less comprehensive than under the full equity method.