- This topic has 1 reply, 2 voices, and was last updated 8 years ago by .
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for September & December 2024 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q2 Dec 14 Keshi Co
I am confused how the interest rate swap works in this question.
I don’t understand why the answer says that Keshi will borrow at L+0.4% but then receive only LIBOR – should they not receive LIBOR +0.30%?
How is the effective borrowing rate figure worked out?
Is the total possible benefit of 0.8% simply the difference between the basis differential?
Sorry SWAPS really confuse me!
They can settle up between themselves in whatever way they want – it does not have to be that way.
What matters is the final net result.
If you watch my free lecture on swaps then I do explain what is happening and how to sort it out 🙂