Consider a $100 Five-Year Zero-Coupon Swap to Pay Fixed and Receive

question 29

Multiple Choice

Consider a $100 five-year zero-coupon swap to pay fixed and receive floating. The five-year spot rate is 5% expressed with semi-annual compounding. The floating leg makes payments every six months indexed to Libor. What is the final payment on the fixed leg of this swap?

• A) $78
• B) $100
• C) $125
• D) $128

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Definitions:

Physiological Reactions

Bodily responses or changes triggered by internal or external stimuli, including heart rate, breathing, and hormonal fluxes.

Validity

Accuracy; the extent to which a test or other measuring instrument measures what it is supposed to measure.

Reliability

The extent to which a test or other measuring instrument yields consistent results.

Self-report

A method of gathering data in which individuals provide information about themselves, often used in surveys and questionnaires.