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Question - Analyze a two-year swap agreement to exchange LIBOR for fixed-rate payments on a $100 million notional principal. The first payment will be made in one year; the second in two years. You have the following information on LIBOR rates: One-year spot rate is 3% per year. Forward rate in the second year is 5% per year. (Show all work)
a) What must be the annualized two-year spot LIBOR rate?
b) Find the floating-rate payments to be made.
c) Find the present value of the floating-rate payments.
d) Find the fixed rate that would price the swap correctly.
e) Now suppose that at T=1, just after the first payments were made, interest rate over year two turns out to be 6% per year (instead of 5% originally estimated). Which party is at a loss now: the one making the fixed payments, or the one making the floating payments? Which party faces credit risk?
a. Is their retirement plan achievable as is? b. If not, what are the alternatives that could help reconcile needs and resources? c. What is your recommendation?
Contact your state National Guard office. Find out what kinds of resources they can offer to assist local communities in the event of a disaster and what kind of training and exercises they conduct to prepare their members for disaster response.
Compute the difference inservice volume (number of meals served) between the high and the low time periods (months). Subtract the low time period from the high time period.
Answer They have low expense ratios They do not have management continuity issues They track the overall market or a segment of the market All of the choices provided are true They are not "actively" managed .
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How does the inclusion of one or more control groups help us determine cause and effect in a true experiment?
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