An Interest Rate Swap to Synthetically Convert Floating Rate Debt

question 3

Multiple Choice

An interest rate swap to synthetically convert floating rate debt into fixed rate debt would:

• A)Represent a cash flow hedge.
• B)Represent a fair value hedge.
• C)Represent a foreign currency hedge.
• D)Not qualify as a hedge.

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Definitions:

Enclosure Movement

A legal process that divided large farm fields in England that were previously collectively owned by groups of peasants into smaller, individually owned plots. The enclosure movement took place over several centuries and resulted in eviction for many peasants.

Sixteenth-Century

Referring to the period of time from 1501 to 1600, notable for the Renaissance in Europe, exploration, and significant religious reformations.

State Religion

A religion that is officially endorsed and supported by the government of a country.

Executed Protestants

Individuals of the Protestant faith who were put to death for their religious beliefs, often occurring during periods of religious conflict and persecution.