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NEW QUESTION: 1
Which liability is reduced in the system on booking a bill under a Letter of Credit opened by a customer? (Choose the best answer.)
A. Bill liability
B. LC liability
C. Acceptance liability
D. Collection liability
Answer: B

NEW QUESTION: 2
Given:

What is the result?
A. c= nullb = falsef = 0.0F
B. c=b = falsef = 0.0
C. c=0b = falsef = 0.0f
D. c= nullb = truef = 0.0
Answer: C

NEW QUESTION: 3
A bank sells an interest rate swap to its client, with the client agreeing to pay the bank a fixed 4% and receive
3 month LIBOR + 100 basis points, payments due every quarter. After quarter 1, the 3 month LIBOR is 2% pa. Which of the following payments will happen in respect of this swap, assuming the contract notional is
$100m, and the rate convention is 30/360.
A. Bank pays customer $1,000,000 and customer pays the bank $750,000
B. Bank pays customer $1,000,000
C. Customer pays bank $250,000
D. Bank pays customer $250,000
Answer: C
Explanation:
Explanation
In an interest rate swap, only the net payment is made. In this case,
- the customer pays the bank 4%*(3/12)*$100m
- the bank owes the customer (2% + 100bp))*(3/12)*$100m
Therefore the customer pays (4% - (2% + 100bp))*(3/12)*$100m. 3/12 represents the 3 month time interval.
This is equal to a net payment of $250k from the customer to the bank. Therefore Choice 'c' is the correct answer and the rest are incorrect.