Which of the following statements is correct about SWAP ? Select one: a. Notional principal is...
Which of the following statements is correct about SWAP ?
Select one:
a. Notional principal is exchanged both in the case of Interest Rate Swaps as well as Currency Swaps
b. Notional principal is exchanged only in the case of Currency Swaps
c. Notional principal is exchanged neither in the case of Interest Rate Swaps nor in case of Currency Swaps
d. Notional principal is exchanged only in the case of Interest Rate Swaps
Homework Answers
Notional Principal refers to the assumed amount of principal involved in a financial transaction, even though it is functionally separated from the transaction. In an interest rate swap, notional principal is used to calculate the interest rate ( fixed and floating) that the parties are obligated to pay to each other. A currency swap involves two parties that exchange a notional principal wih one another in order to gain exposure to a desired currency.
Hence, notional principal is exchanged in case of Currency Swaps, In Int Rate swaps, it is only used to calculate the interest but the notional principal is not exchanged. Hence, the answer is option b.
Add Answer to:
Which of the following statements is correct about SWAP ?
Select one:
a. Notional principal is...
Which of the following statements is/are correct? 1. The principal but not the interest to be paid this year on a 30-yea...
Which of the following statements is/are correct? 1. The principal but not the interest to be paid this year on a 30-year mortgage is properly classified on the Statement of Financial Position as a current liability. 2. A CD with a maturity of 9-months is classified as an investment asset on the Statement of Financial Position. Select one: a. a. 1 only. b. b. 2 only. c. c. Both 1 and 2. d. d. Neither 1 nor 2. Question 12...
An interest rate swap has the following specifications: Notional principal = $100m Pay fixed rate (annual...
An interest rate swap has the following specifications: Notional principal = $100m Pay fixed rate (annual basis) = 7% Received rate (annual basis) = LIBOR plus 1% Interest rate calculations are in quarterly basis. Counterparty X entered a pay fixed rate swap on Jan 1, 2019 with Counterparty Y. On Dec 31, 2019, the LIBOR rate is 5.5%. What should be the net cashflow?
Which of the following statements is true about the bisulfate anion HSO4-? Select one: 0 a....
Which of the following statements is true about the bisulfate anion HSO4-? Select one: 0 a. It can behave as either an acid or a base O b. It can only behave as an acid. O c. It can only behave as a base. d. It does not react with water. o e. It is a salt. So, it is neither an acid nor a base.
la) Under the terms of a currency swap, a company has agreed to receive a fixed...
la) Under the terms of a currency swap, a company has agreed to receive a fixed interest rate of 10% per annum on an American dollar loan with a notional principal of $5 million. In exchange, the company will pay a fixed interest rate of 8% per annum on a Dutch Euro Loan with a notional principal of €2.5 million. Net interest payments are exchanged every six months. The swap has a remaining life of thirteen months. The current interest...
Which of the following in not true of interest rate swaps? A. Payments are based on...
Which of the following in not true of interest rate swaps? A. Payments are based on notional principal to which interest rates are applied. B. Contracts are more standardized than other derivatives. C. Swap markets are characterized by over-the-counter trading. D. All of the above are true.
Which of the following statements are true? Select all that apply A Basis spread is the...
Which of the following statements are true? Select all that apply A Basis spread is the rate differential added to the lower of two floating rates in a swap. B The present value of floating rate payments in a swap, at initiation, is always 1. C If you are paying a fixed interest rate and receiving a stock's return in a swap, and the stock's return is negative, you have to pay more than the interest payment to the other...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000 and EUR63,000,000, and the GBP rate is 5.50% while the EUR rate is 3.75%. Payments are made semiannually, and the current exchange rate is GBP1.0780/EUR. What are the interest payments each period? a. EUR1,732,500; GBP1,273,388 b. EUR1,273,388; GBP3,465,000 c. EUR1,181,250; GBP1,181,250 d. EUR1,867,635; GBP1,181,250 e. EUR1,181,250; GBP1,867,635
4.Which one of the following statements about the approach to bond pricing is NOT true? Select...
4.Which one of the following statements about the approach to bond pricing is NOT true? Select one: A. To calculate a bond's price, one needs to calculate the present value of the bond's expected cash flows. B. The value, or price, of any asset is the future value of its cash flows. 6.Which one of the following statements is NOT true? Select one: A. The yield to maturity of a bond is the discount rate that makes the present value...
Which of the following statements about an acquiescence is correct? Select one a. An acquiescence is...
Which of the following statements about an acquiescence is correct? Select one a. An acquiescence is issued in the Federal Register. b. Acquiescences are published only for certain regular decisions of the U.S. Tax Court C. An acquiescence is published in the Internal Revenue Bulletin. The IRS does not issue acquiescences to adverse decisions that are not appealed All of the above are correct.
Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss Franc and pay U.S....
Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss Franc and pay U.S. dollar annually, on a notional amount of $6,000,000. The spot exchange rate at the time of the swap is SF0.8/$. Which of the following statements is correct about Carlton's position on interest rates in the swaps? Euro-€ Swiss franc U. S. dollar Japanese yen Years Bid Ask Bid Ask Bid Ask Bid Ask 2 3.08 3.12 1.68 1.76 5.43 5.46 0.45 0.49 3 3.25...
Which of the following statements is true about the bisulfate anion HSO4-? Select one: 0 a. It can behave as either an acid or a base O b. It can only behave as an acid. O c. It can only behave as a base. d. It does not react with water. o e. It is a salt. So, it is neither an acid nor a base.
la) Under the terms of a currency swap, a company has agreed to receive a fixed interest rate of 10% per annum on an American dollar loan with a notional principal of $5 million. In exchange, the company will pay a fixed interest rate of 8% per annum on a Dutch Euro Loan with a notional principal of €2.5 million. Net interest payments are exchanged every six months. The swap has a remaining life of thirteen months. The current interest...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000 and EUR63,000,000, and the GBP rate is 5.50% while the EUR rate is 3.75%. Payments are made semiannually, and the current exchange rate is GBP1.0780/EUR. What are the interest payments each period? a. EUR1,732,500; GBP1,273,388 b. EUR1,273,388; GBP3,465,000 c. EUR1,181,250; GBP1,181,250 d. EUR1,867,635; GBP1,181,250 e. EUR1,181,250; GBP1,867,635
Which of the following statements about an acquiescence is correct? Select one a. An acquiescence is issued in the Federal Register. b. Acquiescences are published only for certain regular decisions of the U.S. Tax Court C. An acquiescence is published in the Internal Revenue Bulletin. The IRS does not issue acquiescences to adverse decisions that are not appealed All of the above are correct.
Most questions answered within 3 hours.
-
Lower Equitorial and Upper Equitorial are the same except Lower
Equitorial has a larger capital stock....
asked 3 minutes ago -
how do you think that pH of a jar where you have added a certain
amount...
asked 13 minutes ago -
If the Federal Reserve increases the reserve requirement, what
will happen to the Money Supply in...
asked 8 minutes ago -
Suppose that market demand for a good is given by Q = 9 - 0.3 P...
asked 15 minutes ago -
two thin lenses are separated by a distance x. The first lens
has a focal length...
asked 16 minutes ago -
The computer that controls a bank's automatic teller machine
crashes a mean of 0.6 times per...
asked 20 minutes ago -
`1) How is -9 (base 10) represented in 8-bit two's complement
notation?
a) 00001001
b)11110111
c)11110110...
asked 29 minutes ago -
A 10.000 g sample of water contains 11.19% H by mass. what
should be the %H...
asked 47 minutes ago -
Consider an investment game among 2 players. Each player can
either invest,
i, or not invest,-i....
asked 44 minutes ago -
The time taken to complete a particular task is normally
distributed with a standard deviation of...
asked 54 minutes ago -
we have heteroskedasticity in a regression when:
When the variance of error terms changes when an...
asked 1 hour ago -
Explain some different types of fungi. State the different
divisions undergo by fungi.
asked 1 hour ago