By Convention, a Swap Buyer on an Interest Rate Swap

question 30

Multiple Choice

By convention, a swap buyer on an interest rate swap agrees to

• A) periodically pay a fixed rate of interest and receive a floating rate of interest.
• B) periodically pay a floating rate of interest and receive a fixed rate of interest.
• C) swap both principle and interest at contract maturity.
• D) back both sides of the swap agreement.
• E) act as the dealer in the swap agreement.

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Definitions:

Direct Labor Rate

The cost of wages paid to workers directly involved in the production of goods or services, often used in job costing.

Materials Markup

A pricing method where a percentage is added to the cost of materials to cover overhead and profit.

Markup Percentage

A measure of how much the price of a product or service is increased over its cost to the seller, expressed as a percentage of the cost.

Variable Product Cost

Expenses that fluctuate in direct proportion to the amount of output produced, including direct labor and raw materials.