Question 1

Describe briefly the nature of a swap and its primary component.

Accepted Answer

A swap is an agreement between...

Question 2

A 6 month swaption on oil has a strike price of $15. With 3 month remaining, the fixed price on the swap is $16.00. If an investor exercises the swaption and enters into a new swap, what is the net cash flow at settlement?

Accepted Answer

A)   $15.00 paid
B)   $16.00 received
C)   $1.00 paid
D)   $1.00 receivedE) A) and D)
F) A) and C)

Question 3

Assume corn spot prices over the next 3 years are $2.20, $2.35, and $2.28, respectively. The original swap price was $2.30 per bushel. If cash settlement occurs, what transaction will the counter-party make in year 2 on a 5,000-bushel swap agreement?

Accepted Answer

A)   $250 payment
B)   $250 receipt
C)   $100 payment
D)   $100 receiptE) A) and D)
F) All of the above

Exam 8: Swaps

Describe briefly the nature of a swap and its primary component.

Correct Answer
verified
A swap is an agreement between...
View Answer

Assume corn spot prices over the next 3 years are $2.20, $2.35, and $2.28, respectively. The original swap price was $2.30 per bushel. If cash settlement occurs, what transaction will the counter-party make in year 2 on a 5,000-bushel swap agreement?

Correct Answer
verified

A 6 month swaption on oil has a strike price of $15. With 3 month remaining, the fixed price on the swap is $16.00. If an investor exercises the swaption and enters into a new swap, what is the net cash flow at settlement?

Correct Answer
verified

Exam 8: Swaps

Describe briefly the nature of a swap and its primary component.

Correct AnswerverifiedA swap is an agreement between...View AnswerShow Answer

Assume corn spot prices over the next 3 years are $2.20, $2.35, and $2.28, respectively. The original swap price was $2.30 per bushel. If cash settlement occurs, what transaction will the counter-party make in year 2 on a 5,000-bushel swap agreement?

Correct AnswerverifiedShow Answer

A 6 month swaption on oil has a strike price of $15. With 3 month remaining, the fixed price on the swap is $16.00. If an investor exercises the swaption and enters into a new swap, what is the net cash flow at settlement?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A swap is an agreement between...
View Answer

Correct Answer
verified

Correct Answer
verified