A Constant Maturity Swap Has Which of the Following Characteristics

question 19

Multiple Choice

A constant maturity swap has which of the following characteristics

• A)the swap maturity is held constant at a fixed number of years
• B)the floating payment is usually based on the rate on a Treasury note
• C)the swap calls for all payments to be made at its maturity
• D)the floating payment and the maturity are both constant
• E)none of the above

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Definitions:

Pay Back

The period of time it takes for an investment to generate enough returns to recover the original investment cost.

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent or salaries.

Accounting Break-even

The point at which a company's total revenues exactly match its total expenses, indicating no net profit or loss from operations.

Financial Break-even

The point at which total revenues and total expenses are equal, resulting in no net profit or loss, indicating the minimum performance level required to avoid losing money.