An Equivalent Description of the Holding of a Receive-Floating Pay-Fixed

question 19

Multiple Choice

An equivalent description of the holding of a receive-floating pay-fixed swap is as follows:

• A) An exchange of a long position in a fixed-rate bond for a short position in a floating-rate note.
• B) A portfolio of long positions in forward-rate agreements (FRAs) for each swap payment date, all at the same fixed rate as the swap.
• C) A bond that pays the fixed rate minus the floating rate each period.
• D) All of the above.

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Definitions:

Statistical Methods

The collection of techniques used for collecting, analyzing, interpreting, and presenting data.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation, which can be tested through experiments or observations.

Educated Guess

A hypothesis or assumption made based on prior knowledge and rational inferences.

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation.