1. You wish to create a synthetic forward rate agreement in which you would lock in the current forward rate on borrowing a loan between day 180 and day 360. The price of a 180-day zero coupon bond is 0.9875 and the price of 360-day zero coupon bond is 0.9798. What are the transactions used to create this instrument?
A. long the 180-day bonds and short (FV) 0.9922 of the 360-day bonds.
B. short the 180-day bonds and long in (FV) 0.9922 of the 360-day bonds.
C. short the 180-day bonds and long in (FV)1.0079 of the 360-day bonds.
D. long the 180-day bonds and short (FV) 1.0079 of the 360-day bonds.
2. The writer of a payer swaption has:
A. the right to enter a swap in the future as the floating-rate payer.
B. the right to enter a swap in the future as the fixed-rate payer.
C. an obligation to enter a swap in the future as the floating-rate payer.
D. an obligation to enter a swap in the future as the fixed-rate payer.