Find the Upcoming Net Payment in a Plain Vanilla Interest

question 17

Multiple Choice

Find the upcoming net payment in a plain vanilla interest rate swap in which the fixed party pays 10 percent and the floating rate for the upcoming payment is 9.5 percent.The notional amount is $20 million and payments are based on the assumption of 180 days in the payment period and 360 days in a year.

• A)fixed payer pays $1,950,000
• B)fixed payer pays $950,000
• C)floating payer pays $1 million
• D)floating payer pays $50,000
• E)fixed payer pays $50,000

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Definitions:

Cartilage

A flexible, rubbery connective tissue found in various parts of the body, such as the joints, rib cage, and ear, providing support and structure.

Ribs

Long, curved bones that form the rib cage, providing protection to the thoracic organs and support to the upper body.

Sternum

The sternum, or breastbone, is a long flat bone located at the center of the chest, connecting to the ribs and supporting the thoracic region.

Epiphysis

The end part of a long bone, which is initially growing separately from the shaft during development.