Ali Company and Bill Company entered into a semi-annual pay plain vanilla interest rate swap with a nominal value of $8,000,000. Bill offered to pay Ali a fixed annual rate of 2.75% (with semi-annual compounding). The remaining life of the swap is nine months. Assume the six-month LIBOR rate observed three months ago was 2.6% with semi-annual compounding. Today's three and nine month LIBOR rates are 2.526% and 2.846% (with continuous compounding). The implied forward rate is 3.0287% with semi-annual compounding. What is the value of the swap to Bill Company using the FRA methodology? Do not round intermediate calculations.

A.$4,950

B.$2,009

C.-$1,407

D.$5,613

Ali Company and Bill Company entered into a semi-annual pay plain vanilla interest rate swap with a nominal value of $8,000,000. Bill offered to pay Ali a fixed annual rate of 2.75% (with semi-annual compounding). The remaining life of the swap is nine months. Assume the six-month LIBOR rate observed three months ago was 2.6% with semi-annual compounding. Today's three and nine month LIBOR rates are 2.526% and 2.846% (with continuous compounding). The implied forward rate is 3.0287% with semi-annual compounding. What is the present value of the net cash flow (or payoff) at nine months point to Bill Company?

A.$4,556

B.$4,913

C.$8,904

D.$10,913

Consider the following Markov chain with the following transition diagram on states {1, 2, 3} al- 2 CO 173 3 (a) Is this Markov chain irreducible? [1 marks] (b) Find the probability of the Markov chain to move to state 3 after two time steps, providing it starts in state 2. [3 marks]In general, the study of choices people make in a world of limits is called... Select one: O scarcity O macroeconomics O subjective values O microeconomics O rationing O free goods O rational decision-making O scarce goods economics normative economics O positive economics O ceteris paribus