Question: On June 1, 2014, A and B enter into a contract with a term of 5 years. Pursuant to the contract, beginning 6/1/2015 A must

  1. On June 1, 2014, A and B enter into a contract with a term of 5 years. Pursuant to the contract, beginning 6/1/2015 A must make a payment to B in an amount equal to LIBOR (determined on the date immediately preceding June 1), multiplied by $500,000,000. Each June 1, beginning in 2015, B must make a payment to A equal to 2% times $500,000,000. The contract is an example of:

    1. Notional principal contract

    2. Forward contract

    3. Futures contract

    4. Option contract

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