Consider an Oil Swap in Which You Pay the Floating $A$

question 10

Multiple Choice

Consider an oil swap in which you pay the floating price of oil in exchange for a fixed amount $A$ . The price of a new oil swap (i.e., the breakeven value $A$ ) increases when

• A) The spot price of the commodity declines.
• B) The convenience yield on the commodity increases.
• C) Interest rates rise.
• D) All of the above.

---

Definitions:

Control Variables

Variables that researchers hold constant or monitor in order to assess the effect of the independent variable on the dependent variable in an experimental design.

Context

The circumstances or setting surrounding an event, statement, or idea which can influence its meaning or effect.

Sequence

An ordered series or arrangement of items, events, or ideas, one following the other in a specific logical or set pattern.

Relationships

The ways in which two or more people or entities are connected and interact with each other.