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0 Exakte Antworten 0 Text Antworten 20 Multiple Choice Antworten
Fenster schliessen
  1. A company can invest funds for five years at LIBOR minus 30 basis points. The five-year swap rate is 3%. What fixed rate of interest can the company earn by using the swap?  
2.4

2.7

3.0

3.3

Fenster schliessen
  1. Which of the following is true?
A. Principals are not usually exchanged in a currency swap

B. The principal amounts usually flow in the opposite direction to interest payments at the beginning of a currency swap and in the same direction as interest payments at the end of the swap.

C. The principal amounts usually flow in the same direction as interest payments at the beginning of a currency swap and in the opposite direction to interest payments at the end of the swap.

D. Principals are not usually specified in a currency swap

Fenster schliessen
  1. Company X and Company Y have been offered the following rates

        

 

Fixed Rate

Floating Rate

Company X

  1.  

3-month LIBOR plus 10bp

Company Y

  1.  

3-month LIBOR plus 30 bp

 

Suppose that Company X borrows fixed and company Y borrows floating. If they enter into a swap with each other where the apparent benefits are shared equally, what is company X’s effective borrowing rate?

A. 3-month LIBOR−30bp

B. 3.1%

C. 3-month LIBOR−10bp

D. 3.3%

Fenster schliessen
  1. Which of the following describes the five-year swap rate?
A. The fixed rate of interest which a swap market maker is prepared to pay in exchange for LIBOR on a 5-year swap

B. The fixed rate of interest which a swap market maker is prepared to receive in exchange for LIBOR on a 5-year swap

C. The average of A and B

D. The higher of A and B

Fenster schliessen
  1. Which of the following is a use of a currency swap?
A. To exchange an investment in one currency for an investment in another currency

B. To exchange borrowing in one currency for borrowings in another currency

C. To take advantage situations where the tax rates in two countries are different

D. All of the above

Fenster schliessen
  1. The reference entity in a credit default swap is
A. The buyer of protection

B. The seller of protection

C. The company or country whose default is being insured against

D. None of the above

Fenster schliessen
  1. Which of the following describes an interest rate swap?
A. The exchange of a fixed rate bond for a floating rate bond

B. A portfolio of forward rate agreements

C. An agreement to exchange interest at a fixed rate for interest at a floating rate

D. All of the above

Fenster schliessen
  1. Which of the following is true for an interest rate swap?
A. A swap is usually worth close to zero when it is first negotiated

B. Each forward rate agreement underlying a swap is worth close to zero when the swap is first entered into

C. Comparative advantage is a valid reason for entering into the swap

D. None of the above