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Good day Sir,
Under swaps i Calculated it like the below
Own borrowing
CMC 2.2%
Counter Y +0.8%
Total Y +3%Swap(borrow opposite)
CMC Y +0.4%
Counter 3.8%
Total Y +4.2%Saving 0.6% EACH
end result CMC 2.2%-0.6%= 1.6%
Counter Y+0.8%-0.6=Y +0.2%Am i correct to do it like that, I noticed in the lecture CMC ówn borrowing was floating.
No, because the way you are showing it would result in an extra cost, not a saving.
(The total of Y + 4.2% is more than the total of Y + 3%)
The answer show in the lecture (and the examiners answer) is correct 🙂
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