Calculate the portfolio duration at the time of the purchase. Problem 7.11 A three-year interest rate swap has a level notional amount of 300,000. Each settle- ment period is one year and the variable rate is the one-year spot interest rate at the beginning of the settlement period. The current spot rate is determined by the following prices for zero-coupon bonds with each having a maturity value of one: Time to Maturity 1 Year 2 Years3 Years 4 Years 5 Years Price 0.97 0.93 0.88 0.82 0.75 (a) Calculate the swap rate. (b) Calculate the net swap payment at the end of the first year. (c) One year has elapsed and the one-year spot interest rate at the start of year 2 is 4.45%. Calculate the net swap payment at the end of the second year for the payer. (d) Two years have elapsed and the one-year spot interest rate at the start of year three is 5.25 Calculate the market value of the swap.

the correct option is 2.

step-by-step explanation:

according to the given information triangle abc is a right angle triangle with right angle at a. segment ab is 5 and segment ac is 7. point d is on segment bc and angles adb and adc are right angles.

it is given that triangles abd, cad, and cba are similar.

two triangles are similar if their corresponding sides are proportional.

in triangle cba, using pythagoras theorem

                      )

triangle abd and cba are similar,

                            (2)

triangle cad and cba are similar,

                      )

using (1), (2) and (3), we get

hence proved.

therefore option 2 is correct.

70

step-by-step explanation:

isocolese triangle

we know that the line connect a and b is the hyptonuse

so first find the hypotonuse length using the distance formula, call the length c

since it is an isocolese triangle, the lengths of the legs are the same

using pythagorean theorem,

in this case, a=b since isocolese triangle so we get

or

we can find c so we can find the distances

we know that if we draw 2 circles, each has center at a and b, and find where they intersect, we can the 2 possible locations for c

if a has center at (xa,ya) and b has center at (xb,yb), then we can solve where

and

intersect to find where they intersect

i'm not going to put an example because i have to go to class. i hope this explanation is enough