An Equity Swap with Fixed Interest Payments Has Two Payments

question 8

Multiple Choice

An equity swap with fixed interest payments has two payments remaining.The first occurs in 30 days and the second occurs in 210 days.The discount factors are 0.9934 (30 days) and 0.9528 (210 days) .The upcoming fixed payment is at 4 percent and is based 180 days in a 360-day year.The equity index was at 1150 at the beginning of the period and is now at 1152.75.The notional principal is $60 million.Find the approximate value of the equity swap from the perspective of the party making the equity payment and receiving the fixed payment.

• A)$143,478
• B)$642,000
• C)-$143,478
• D)-$642,000
• E)-$496,560

Calculate and interpret non-GAAP financial performance measures.

Understand the significance and computation of asset turnover ratios.

Understand the components and importance of financial analysis in business decisions.

Identify factors that can limit or enhance the effectiveness of financial analysis.

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Definitions:

Activity-based Costing

A methodology that assigns manufacturing overhead costs to products in a more logical manner based on the activities that incur costs.

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Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory, applied to all production units equally.

Activity-based Costing

A costing method that allocates overhead costs to specific activities, providing more accurate product costing.