Exhibit 14-10 USE THE FOLLOWING INFORMATION FOR THE NEXT QUESTION(S)

question 19

Multiple Choice

Exhibit 14-10
USE THE FOLLOWING INFORMATION FOR THE NEXT QUESTION(S)
The WallMal Company has entered into a 4-year interest rate swap, with semiannual settlement, to pay a fixed rate of 8% per year and receive 6-month LIBOR. The notional principal is $50,000,000.
-Refer to Exhibit 14-10. Assuming that one year after the swap was initiated the fixed rate on a new 3-year receive fixed pay floating LIBOR swap has risen to 9% per year, calculate the market value of the 8% fixed rate bond based on $100 face value. Settlement is on a semiannual basis.

• A) $76.45
• B) $101.24
• C) $100.0
• D) $97.42
• E) $70.77

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Definitions:

Performance Pay

Compensation model where employees are rewarded based on their job performance, including quality and efficiency, often used as an incentive to enhance productivity.

Compensation Mechanism

A system or method used to determine and distribute salary, benefits, and other forms of pay to employees in exchange for their work.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Medical Coverage

A type of insurance plan that covers the cost of an individual's medical and surgical expenses.