You Have the View That Rates Will Be Rising Over

question 10

Multiple Choice

You have the view that rates will be rising over time. What is thebest kind of swap to exploit this view from among the following alternatives?

• A) Pay fixed, receive floating.
• B) Pay floating, receive fixed.
• C) A maturity-mismatch basis swap in which you pay floating indexed to three-month Libor and receive fixed indexed to six-month Libor.
• D) Pay fixed, receive floating on a reverse-amortization swap.

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Definitions:

Fixed Costs

are business expenses that remain unchanged irrespective of the level of production or sales activity, such as rent, salaries, and insurance.

Line of Sight

The clear and understandable link employees see between their job performance and outcomes and the overall objectives or goals of the company.

Straight Commission Plan

A compensation strategy where an employee's pay is based solely on sales generated or results achieved, without a base salary.

Medical Imaging

The technique and process of creating visual representations of the interior of a body for clinical analysis and medical intervention.