If a broker refers to "the payer of 5- year euro at 4.12", what is this party doing?
A) Paying a fixed rate of 4.12% per annum on a 30/360
B) Paying a fixed rate of 4.12% per annum on an actua
C) Paying a 5-year euro deposit and receiving a rate
D) Taking a 5-year euro deposit and paying a rate of

Question

Quizplus · Accepted Answer

The wording "payer of 5-year euro" suggests that this party is paying a fixed rate, and the specified rate of 4.12% per annum is consistent with a fixed rate. The use of "30/360" indicates that the rate is calculated based on a 360-day year with 30-day months, which is a common convention in the euro money market. Option B is incorrect because "actual/360" is not mentioned. Option C is incorrect because the party is not receiving a rate, but rather paying it. Option D is incorrect because it reverses the roles of the party mentioned.

If a Broker Refers to "The Payer of 5- Year