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If You Have Three Years Left on a Five-Year Fixed

Question 10

Multiple Choice

If you have three years left on a five-year fixed rate loan paying 2 percent quarterly,and you want to transform it into a floating rate loan using a swap,which of the following would be an appropriate method?


A) Enter a five-year receive floating,and pay a fixed swap where the swap rate is 2 percent paid quarterly.
B) Enter a five-year receive fixed,and pay a floating swap where the swap rate is 2 percent paid quarterly.
C) Enter a three-year receive floating,and pay a fixed swap where the swap rate is 2 percent paid quarterly.
D) Enter a three-year receive fixed,and pay a floating swap where the swap rate is 2 percent paid quarterly.
E) Enter a four-year receive fixed,and pay a floating swap where the swap rate is 2 percent paid quarterly.

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