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Hi sir, I watched your lecture on Swap and tried to do Swap question Fitzharris Co Sep/Dec 2020.
In the lecture example, we knew Co X what to borrow Fix rate and Co Y want to borrow Floatingbut in the Fitzharris question How we know which rate( fix or floating) Fitzharris Co and counterparty want to borrow?
In the Answer, Fitz want to borrow Fixed and the counterparty want to borrow Floating but I down know how I’m supposed to know that?
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Hope this helps.
Rather than looking at which party would want to borrow at which rate, you should consider the benefit each party has either at floating rate or fixed rate. Thus, compare floating rate and fixed rate between the two parties – the difference would be the benefit.
Also CMC has similar SWAP question you can try out.
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