An Amortizing Interest-Rate Swap Is One in Which

question 3

Multiple Choice

An amortizing interest-rate swap is one in which

• A) The fixed interest rate in the swap declines in a specified manner over the life of the swap.
• B) The floating interest rate in the swap declines in a specified manner over the life of the swap.
• C) The notional principal amount in the swap declines in a specified manner over the life of the swap.
• D) The time-period between payments in the swap gets shorter in a specified manner.

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Definitions:

Separately Stated Item

Items on a partnership or S corporation tax return that are listed separately to ensure proper tax treatment at the individual level.

Ordinary Expense

In tax terminology, ordinary expense refers to any expense common and accepted in your trade or business operation.

Income Recognition

The accounting principle stating that income should be recognized in the accounting period in which it is earned, regardless of when the cash is received.

Partnership %

A percentage representation of an individual partner's stake in a partnership, correlating to their share of profits, losses, and liabilities.