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Which of the following describes the five-year swap rate?
A.The rate on a five-year loan to a AA-rated company
B.The rate on a five-year loan to an A-rated company
C.The rate that can be earned over five years from a series of short-term loans to AA-rated companies
D.The rate that can be earned over five years from a series of short-term loans to A-rated companies
A.The rate on a five-year loan to a AA-rated company
B.The rate on a five-year loan to an A-rated company
C.The rate that can be earned over five years from a series of short-term loans to AA-rated companies
D.The rate that can be earned over five years from a series of short-term loans to A-rated companies
Answer: C
By considering the effect of making a series of LIBOR loans to AA-rated companies and entering into a swap we see that the swap rate corresponds to the risk in a series of short-term loans.
By considering the effect of making a series of LIBOR loans to AA-rated companies and entering into a swap we see that the swap rate corresponds to the risk in a series of short-term loans.
Karteninfo:
Autor: CoboCards-User
Oberthema: Finance & Investment
Thema: Derivatives
Veröffentlicht: 27.10.2015