41. Find the fixed rate on a plain vanilla interest rate swap with payments every 180 days (assume a 360-day year) for one year. The prices of Eurodollar zero coupon bonds are 0.9756 (180 days) and 0.9434 (360 days). (Points : 1) 5.9 percent 5 percent 6 percent 5.5 percent 2.95 percent

Question 42. 42. Use the information in problem 40 to find the fixed rate on an equity swap in which the stock index is at 2,000. (Points : 1)

2.95 percent 5 percent 6 percent 5.9 percent 3.5 percent

Question 43. 43. Find the market value of a plain vanilla swap from the perspective of the fixed rate payer in which the upcoming payment is in 30 days, and there is one more payment 180 days after that. The fixed rate is 7 percent and the upcoming floating payment is at 6.5 percent. The notional principal is $15 million. Assume 360 days in a year. The prices of Eurodollar zero coupon bonds are 0.9934 (30 days) and 0.9528 (210 days). (Points : 1)

the fixed payer pays $31,763.75 the fixed payer pays $71,527.50 the floating payer pays $49,500 the floating payer pays $194,228 none of the above

Question 44. 44. Which of the following statements about constant maturity swaps is not true? (Points : 1)

the CMT rate is linked to a U. S. treasury security of equivalent maturity the typical maturity is 2 to 5 years the maturity is constant one rate is based on a security of a longer rate than the settlement period the swap is a type of interest rate swap

Question 45. 45. Which of the following is not a way to terminate a swap: (Points : 1)

the two counterparties cash settle the market value enter into an opposite swap with another counterparty hold the swap to its maturity date use a forward contract or option on the swap to enter into an offsetting swap borrow the notional principal and pay off the counterparty

Question 46. 46. An equity swap with fixed interest payments has two payments remaining. The first occurs in 30 days and the second occurs in 210 days. The discount factors are 0.9934 (30 days) and 0.9528 (210 days). The upcoming fixed payment is at 4 percent and is based 180 days in a 360-day year. The equity index was at 1150 at the beginning of the period and is now at 1152.75. The notional principal is $60 million. Find the approximate value of the equity swap from the perspective of the party making the equity payment and receiving the fixed payment. (Points : 1)

$143,478 $642,000 -$143,478 -$642,000 -$496,560

Question 47. 47. The present value of the series of dollar payments in a currency swap per $1 notional principal is $0.03. The present value of the series of euro payments in the same currency swap per 1 is 0.0225. The current exchange rate is $1.05 per euro. If the swap has a notional principal of $100 million and 105 million, find the market value of the swap from the perspective of the party paying euros and receiving dollars. (Points : 1)

$519,375 -$2,480,625 $3,000,000 -$3,000,000 -$519,375

Question 48. 48. Equity swaps can be used for all of the following except: (Points : 1)

to synthetically buy stock to synthetically sell stock to convert dividends into capital gains to synthetically re-align an equity portfolio none of the above

Question 49. 49. Which of the following statements about diff swaps is true? (Points : 1)

they involve interest payments in separate currencies they are based on the difference between interest rates in two countries they are based on the difference between interest rates of different maturities the notional principal reduces throughout the life of the swap the notional principal increases throughout the life of the swap

Question 50. 50. Interest rate swaps can be used for all of the following purposes except: (Points : 1)

to hedge interest rate risk to convert a fixed-rate loan into a floating-rate loan to convert a floating-rate loan into a fixed-rate loan to speculate on interest rates to borrow at the prime rate