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November 19, 2020 at 12:33 pm
I have found your lectures very helpful.
Thank you very much!
John Moffat says
November 19, 2020 at 12:49 pm
Thank you for your comment 🙂
November 3, 2020 at 1:56 am
Finally i understand how this interest swap is done! your method is so easy to understand.
As you mentioned in the lecture on the second method which is more messier, can i just used your first method which is more simpler in the exam? just to clarify it because i see the second ‘messy’ method is use commonly in the past paper answer.
November 3, 2020 at 9:50 am
Yes, it is fine for the exam (unless the arrangement in the question is specifically stated differently).
June 24, 2020 at 10:58 pm
great lecture. Thank you
June 17, 2020 at 6:58 pm
Excellent tutor 🙂 thank you so much for your presentations , very clean and nice explained
November 26, 2019 at 9:27 pm
Thank you for the lectures. Just need clarifications. In the exams how do we know the rate at which each of them wants to borrow or the examiner will always indicate
April 10, 2019 at 1:00 am
Sir, you are an amazing lecturer. Thank you for being such amazing.
April 10, 2019 at 6:39 am
December 6, 2018 at 12:46 pm
In example 1, what’s the incentive for X to do the swap at all? Surely they’re just exposing themselves to more risk?
If they were determined to borrow the money on behalf of Y, why wouldn’t they take out both loans and then split that difference so they could save an extra 1% each?
December 6, 2018 at 5:20 pm
The question specifically says that they wish to borrow floating – it is not for you in the exam to decide what they should do!!
As I explain in the lecture, they no doubt want to borrow at floating rate because their income fluctuates with interest rates. In that case it would be very sensible in terms of reducing risk.
As for your suggestion – how on earth do you think that they could take out loans for company Y?
November 21, 2018 at 11:44 pm
John, Just done example 2 from the notes (Pg 108). How do we know that currently A is borrowing at fixed rate and B at floating? I had them the wrong way around, e.g. A @ floating and B@Fixed.
Thank you, Darshana
November 22, 2018 at 8:32 am
The question says that company A’s income fluctuates with interest rates – that implies that they want to borrow floating.
A is not currently borrowing anything. They have the choice of borrowing floating directly, or borrowing fixed and swapping. (I assume you are watching the lectures and not using the lecture notes on their own?)
November 16, 2018 at 7:42 pm
Dear sir John, I have a question regarding Mar/Jun 2017- Buryecs
If we have a bank fee in a swap agreement, hw do we keep it under our workings?
September 4, 2018 at 11:16 pm
In illustrating the interest rate swap, some answers in BPP’s revision kit suggested paying the bank either the LIBOR and/or the balancing interest rate. Should I follow their approach although your method is much easier to understand. However I guess in real life it would be the bank who is the matchmaker to arrange the swap for companies so it makes sense to pay the balancing rates to them?
September 5, 2018 at 6:00 am
For the exam it does not matter how the swap is settled up (unless, obviously, the question specifically tells you how it is to be done).
September 1, 2018 at 10:10 pm
John, in the exam, can it be such that there is no saving on swapping. If yes, then how do we conclude? Do we simply show that there are no potential savings and hence suggest not to swap.
Thanking you in advance for your help. 🙂
September 2, 2018 at 10:20 am
Yes, it could be the case (although unlikely in the exam), in which case you would still show the workings and explain that there would be no saving to be made.
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