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Business, 30.04.2021 21:30 kawaiiblurainbow

Gotham Corp. issues a 7-year floating rate bond with a par value of $10 million to Bruce beginning of the year 2011. The bond has annual coupons based on one-year LIBOR rate. Five years later, Gotham Corp. hedges against rising interest rates by entering into a 2-year interest rate swap with Tony. On the same day, Bruce expects future interest rates to fall and enters into a 2-year interest rate swap with Peter. Both the swap agreements have notional amount of $10 million, and variable rates based on the one-year LIBOR rate. Six years from the time of the bond issuance, the LIBOR rate falls below the swap rate of both the interest rate swap agreements. Which of the following is TRUE? a. Gotham Corp. is the receiver in the interest rate swap with Tony.
b. Bruce is a debtor of Gotham Corp.
с. Bruce is the payer in the Interest rate swap with Peter.
d. Peter's net swap payment in 2017 is positive.
e. The market value of the swap between Gotham Corp. and Tony at the beginning of 2017, from Tony's perspective is negative

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