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

Determine if the following items represent an example of positive economics or normative economics. The richest 1% of Americans should pay more taxes than the rest of the 99%. O Positive Economics O Normative Economics A decrease in the supply of coconut will increase the price of German O Normative Economics chocolate cake, a good which requires coconut shavings as a key ingredient O Positive Economics The higher the minimum wage, the higher the price of goods and services Normative Economics is likely to bo. OO Positive Economics Social welfare spending in Sweden occupies too large a portion of the O Positive Economics national budget. O Normative Economics12. Normative Economics is: A) An economic prediction based on an analysis of historical trends B) An analysis of actual economic results C) An economic model that predicts future economic results based upon assumed change to one or more economic factors, while holding other economic factors constant D) Both A and C 13. What can cause the Production Possibility Frontier (PPF) to contract, that is to say, move the PPF further to the left? A) Minimum Wage B) Price Ceiling C) An increase in raw materials needed in production D) Price Floor 14. When the market is in equilibrium: A) More profit is made B) Consumers benefit but producers do not C) The use of economic resources is maximized D) Both B and C 15. Minimum wage is a price floor that A) Might increase the cost of production if wages would have otherwise been lower B) May increase both consumer and producer value C) Might not increase the cost of production if wages are already higher D) Both A and C 16. Economic decisions are made "on the margin". What does this mean? A) Tradeoffs are based on marginal value B) Tradeoffs are based on average value C) Tradeoffs are based on total value D) None of the above 17. What does a Production Possibility Frontier represent? A) The line or curve that defines the comparative advantage between products B) The line or curve that defines the cost production tradeoffs between products C) The line or curve that defines the consumption tradeoffs between products D) Both A and B