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Hi sir pertaining to doric co qns dec2010, part (ii); ask for the income position, is it just do profit and loss? because answer shows p&l and balance sheet?
Sir can u see whether my knowledge on comparative or absolute advantage right on interest rate swap?(qns ask not related to this qns doric co)
comparative advantage is when one party has better in both fixed and floating rate.
absolute advantage is when each party has better rate in either fixed or floating rate.
ThanksPart (ii) also asks for the value, which is why figures from the SOFP are needed.
(Appreciate in the exam that the terms P&L and Balance Sheet will not be used – the names changed years ago. It is Statement of profit or loss, and Statement of financial position.)
Comparative advantage is where the difference in the two fixed rates is less than the difference in the two floating rates (or vice versa).
Absolute advantage is not relevant.
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