AAII - DI III (I)

Cash-flow hedge is applied by below scheme of interest rate swap ...

• pay-variable, received-variable

• pay-fixed, received-fixed

• pay-variable, receive-fixed

• pay-fixed, receive-variable

Fair-value hedge is applied by below scheme of interest rate swap ...

• pay-variable, receive-variable

• pay-fixed, receive-fixed

• pay-fixed, receive-variable

• pay-variable, receive-fixed

The goal of cash-flow hedge is to ...

• synchronize cash flow with the earnings

• optimize the potential of cash flow

• eliminate the variability of the cash flow

• eliminate the negative impact to cash flow

Sky Corp. borrows $100,000 from State Bank for three-year with interest paid annually at variable-rate. The formula of interest-rate is the Singapore Interbank Offer Rate (SIBOR) + 1 percent, determined at the end of each year for the next year.

The

• pay-fixed, receive-fixed

• pay-fixed, receive-variable

• pay-variable, receive-variable

• pay-variable, receive-fixed

Interest expense will have the same balance every year during the loan period under below scheme of interest rate swap.

• pay-variable, receive-fixed

• pay-fixed, receive-variable

• pay-fixed, receive-fixed

• pay-variable, receive-variable