Derivatives - Derivatives Section 2
36. At the initiation of the contract, the value of a swap typically is:
37. At the initiation of the contract, price of a swap typically:
38. The principle of replication states that the valuation of a swap is the present value of the:
- Option : C
- Explanation : The principal of replication states that the valuation of a swap is the present value of all the net cash flow payments from the swap.
39. Which of the following statements is most likely correct?
- Option : C
- Explanation : The price of a swap is established at the start of the swap and remains fixed. The value of a swap is typically zero at the start of the swap and changes during the life of the swap.
40. Which of the following is least likely correct?
- Option : B
- Explanation : Options A and C represent correct statements. The value of a swap is the present value of net cash flow payments from the swap.
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