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Consider a 1-year swap that is initiated today between Company A and Company B. The terms of the deal require that the two companies make
Consider a 1-year swap that is initiated today between Company A and Company B. The terms of the deal require that the two companies make quarterly payments based on a notional principal of $20 million. LIBOR spot rates today are as follows: Term Rate 90-day 0.0028 0.0044 180-day 270-day 360-day 0.0058 0.0073 LIBOR rates 90 days later are as follows: Term Rate 0.0031 90-day 180-day 270-day 0.0048 0.0061 The quarterly fixed-rate payment is closest to: Select one: O a $14,000 O b. $36,000 Oc. $14,000 $ O d. $3,600,000 The next floating-rate payment is closest to: Select one: O a. $56,000 O b. $3,600,000 O c. $36,000 O d. $14,000 Consider a 1-year swap that is initiated today between Company A and Company B. The terms of the deal require that the two companies make quarterly payments based on a notional principal of $20 million. LIBOR spot rates today are as follows: Term Rate 90-day 0.0028 0.0044 180-day 270-day 360-day 0.0058 0.0073 LIBOR rates 90 days later are as follows: Term Rate 0.0031 90-day 180-day 270-day 0.0048 0.0061 The quarterly fixed-rate payment is closest to: Select one: O a $14,000 O b. $36,000 Oc. $14,000 $ O d. $3,600,000 The next floating-rate payment is closest to: Select one: O a. $56,000 O b. $3,600,000 O c. $36,000 O d. $14,000
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