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mafiozo [28]
3 years ago
13

VANILLA SWAPS Cleveland Insurance Company has just negotiated a three-year plain vanilla swap in which it will exchange fixed pa

yments of 8 percent for floating payments of LIBOR plus 1 percent. The notional principal is $50 million. LIBOR is expected to be 7 percent, 9 percent, and 10 percent (respectively) at the end of each of the next three years. Determine the net dollar amount to be received (or paid) by Cleveland each year. Determine the dollar amount to be received (or paid) by the counterparty on this interest rate swap each year based on the assumed forecasts of LIBOR.
Business
1 answer:
Rus_ich [418]3 years ago
6 0

Answer: Check attachment

Explanation:

a. Determine the net dollar amount to be received (or paid) by Cleveland each year.

The the net dollar amount to be received by Cleveland for:

Year 1: = $0

Year 2 = $1,000,000

Year 3: = $1,500,000

b. Determine the dollar amount to be received (or paid) by the counterparty on this interest rate swap each year based on the assumed forecasts of LIBOR.

Check the attachment for further details.

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Suppose there is a simple one good economy that only produces spinning rims. In 2015, the economy was able to produce 1 million
Alex_Xolod [135]

Answer: 0

Explanation:

Firstly, we will calculate the nominal value in 2015 which will be:

= $500 x 1 million

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Real GDP will be the price of the base year multiplied by the quantity of the current year which will be:

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Therefore, the increase in real GDP is zero.

4 0
3 years ago
When financing a car, you must pay ___ on the amount borrowed.
goldfiish [28.3K]
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3 years ago
Is it possible for a company to initiate two products that target the same market that are not mutually exclusive?
Nutka1998 [239]
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4 0
3 years ago
A study by the National Bureau of Economic Research (NBER) examined the responsiveness of consumers to changes in gasoline price
Y_Kistochka [10]

Answer:

Gasoline consumption will decrease by a small amount.

Explanation:

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Inelastic demand means that there's little or no change in quantity demanded when there's a change in the price of a product.

Quantity demanded has little or no sensitivity to changes in price.

If the coefficient of elasticity is greater than one, demand is elastic.

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I hope my answer helps you

3 0
3 years ago
You write one MBI July 139 call contract (equaling 100 shares) for a premium of $17. You hold the option until the expiration da
Bogdan [553]

Answer:

$600 loss

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So there is a loss of $600

4 0
3 years ago
Read 2 more answers
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