Use the Zero-Coupon Bond Prices Given in the Following Table

question 6

Multiple Choice

Use the zero-coupon bond prices given in the following table to answer the questions that follow.
-Consider a three-year swap paying floating receiving fixed with principal of $10 million dollars,paying a fixed rate of 2 percent per year paid yearly,and using the one-year floating spot rate paid yearly.How would one synthetically construct the swaps payoff at time 3 using FRAs and zero-coupon bonds? (Hint: use the answer to question 10. )

• A) long a $10 million notional FRA maturing at time 3 and long 22,222 zero-coupon bonds maturity at time 3
• B) long a $10 million notional FRA maturing at time 3 and long 20,000 zero-coupon bonds maturity at time 3
• C) short a $10 million notional FRA maturing at time 3 and short 22,222 zero-coupon bonds maturity at time 3
• D) short a $10 million notional FRA maturing at time 3 and short 20,000 zero-coupon bonds maturity at time 3
• E) long a $10 million notional FRA maturing at time 3 and short 22,222 zero-coupon bonds maturity at time 3

Understand the concepts of marginal utility and how it influences consumer purchasing behavior.

Comprehend the composition and implications of the consumer's budget line.

Analyze the effects of income and price changes on consumer choices and the budget line.

Recognize the utility-maximizing choices of consumers within budget constraints.

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Definitions:

Rational Analysis

A systematic, logical evaluation of information or concepts to form a judgment or conclusion.

Prejudice

Preconceived opinion or bias against an individual or group without sufficient knowledge, rational reason, or actual experience.

Discrimination

In conditioning, the tendency for an organism to distinguish between a CS and similar stimuli that do not forecast a UCS.

Fear Appeal

A persuasive message that attempts to arouse fear in order to divert behavior through the highlighting of negative consequences.