Company: MYI
Filing Date: 2025-09-02
Form Type: N-14 8C/A
Source: 0001193125-25-193985
Chunk: 223

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-02
Form: N-14 8C/A
Chunk 223
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 a hedge or for duration or risk management although it is permitted to enter into them to enhance income or gain. MVF may

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not sell interest rate caps or floors that it does not own. Interest rate swaps involve the exchange by MVF with another party of their respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments with respect to a notional amount of principal. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to
receive payments of interest on a notional principal amount from the party selling such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate,
to receive payments of interest on a notional principal amount from the party selling such interest rate floor.

MVF may enter into
interest rate swaps, caps and floors on either an asset-based or liability-based basis, and will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with MVF receiving or paying, as the case may be,
only the net amount of the two payments on the payment dates. MVF will accrue the net amount of the excess, if any, of MVF’s obligations over its entitlements with respect to each interest rate swap on a daily basis and will segregate with a
custodian an amount of cash or liquid high grade securities having an aggregate net asset value at all times at least equal to the accrued excess. If there is a default by the other party to such a transaction, MVF will have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap
documentation. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps.

Credit Default Swap Agreements. MVF may enter into credit default swap agreements for hedging purposes or to seek to increase its
return. The credit default swap agreement may have as reference obligations one or more securities that are not currently held by MVF. The protection “buyer” in a credit default contract may be obligated to pay the protection
“seller” an upfront or a periodic stream of payments over the term of the contract, provided that no credit event on a reference obligation has occurred