1 pointChange in the risk profile of the counterparties during the life of the Interest Rate Swap could __________ the fixed rate - floating rate advantage and hence put the Interest Swap Structure in __________. facilitate; order facilitate; disarray alter; disarray alter; order

Which of the following statements is TRUE? Interest rate swaps can be used to: Select one: a. Convert floating rate investments to fixed rate investments b. Convert floating rate debt to fixed rate debt c. Adjust interest rate risk arising in a project or across a business by matching the interest rate sensitivity of interest earned with interest payable d. All of the above

In a vanilla interest rate swap:Group of answer choicesthe amounts payable between parties depends on a specified principal that is exchanged at the beginning and at the end.the amounts payable between parties depend on a specified principal that is exchanged at the outset.only interest flows are exchanged until maturity, when the principal is exchanged according to the difference in the interest rates over the lifetime of the swap.one party pays another party an amount calculated according to a floating interest rate on a notional principal, in exchange for an amount calculated on the basis of a fixed interest rate.

c) Explain the role of a floating exchange rate in adjusting to changes in the Balance of Payments. (6 marks) in economics australia

Companies X and Y have been offered the following rates per annum on a $5 million 10-year investment.Fixed rate Company X is 4% ；Floating rate Company X is BBSW；Fixed rate Company Y is 5% ；Floating rate Company Y is BBSW+2.5%. Company X requires a floating-rate investment. Company Y requires a fixed rate investment. Design a swap such that the dealer bank can receive a commission fee of 0.5% p.a., and the net gain is equally shared between the two companies. Please answer the following questions: (1) Identify the relative comparative advantages for each of the two companies. (2) Compute the net gains from the swap, and how much each company will receive. (3) Design the swap. You can either simply draw the swap plot or discuss the steps in words, to cover the following items. – What rates do each company invest at? – How do they exchange the interest payments with their counter-party? – What are their final investment returns?

A rate anticipation swap is an active strategy undertaken to _____________.Question 17Select one:a.shift between corporate and government bonds when the yield spread is out of line with historical valuesb.increase return by shifting into higher yield bondsc.shift portfolio duration in response to an anticipated change in interest ratesd.profit from apparent mispricing between two bonds