1.. Company XYZ is thinking about getting into a 7% fixed rate loan. Right now, it could borrow money from Eurodollar market using 6-month LIBOR contract. There is a swap contract that matches the fixed-coupon bon and LIBOR well. What should company XYZ do in order to convert the Eurodollar borrowing into a fixed-pay bond?

A.)Entering a swap that pays fixed and receive-floating LIBOR

B.) Entering a swap that pay floating LIBOR and receive fixed rate

C.) Entering a swap that pay fixed and receive another floating rate

D.) Entering a swap that pay fixed and receive another fixed

E.) None of above

2 . Which one of the following swap should exchange the notional amount at the beginning?

A.) Currency swap

B.) Equity Swap

C.) Interest Swap

D.) none of above

E.) All of above

3.. Which of the following statements regarding swaps is wrong?

A.) Swap can be treated as a series of forward

B.) Swap can be treated as a series of future

C.) Swap normally does not trade on exchange

D.) Currency swap normally involves two streams of cash at each payment date

E.) Equity swap does not require exchange of cash at the very beginning

4.. Suppose a U.S. firm operating in the European Region. The U.S. firm wants to convert all the euros back to USD and therefore, the US firm wants to enter a currency swap. Which one of the following actions is wrong regarding the currency swap?

A.) At Time=0 the US firm deposits USD to European Bank

B.) At Time=0, the US firm deposits Euros to the European Bank

C.) At every payment, the US firm pays Euros to the European Bank

5.. the party agreeing to make a fixed-rate payment might also be required to make another payment could happen in:

A) Equity swap

B) Interest swap

C) Currency swap

D) All above are possible to see that happening

E) None above are possible to see that happening