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Sir and what if I have receipt in dollar and I am in euro? Like M/J 2017 q3. No info on contract currency there
You are the magician Sir!
This L+3% and L+4,2% thing got straight to the undiscovered potential of my mind and I quickly understood and I will know now how to apply that in those questions 😉
Now I can say I understand swaps.
Quick advice to others:
1. Get the understanding and method how to calculate the total benefit for both parties and when it’s split.
2. Get the understanding of what we have to borrow and what counter borrows (and this Mr. Moffat excellently stated in this post)
3. Remember about balancing figures when going down with numbers after swap to the end result.
4. Check at the end if what you got is right with calculated advance at the beginning.
5. If everything is right, get a chocolate for yourself and Mr. Moffat 🙂
Thank You Sir!
Thank you for the answer.
Yes, I watched, however still confuses me this topic.
When you say look at 2 alternative end results, do you mean result connected with total 1,2% saving or result like YR-0,2% CMC and 3,2% for counterparty before fees?
All I just don’t get it is that when I approach the question, I know how to get to 1,2% total saving, I can do split 0,6 for each.
But since question doesn’t say specifically what the any party wants, I don’t know how to start the part with: CMC borrows, Counter pays, swap etc.
They start in the answer with CMC borrows at 2.2 and Counter at YR+0,8. Don’t know why?
Why they didn’t start with CMC borrows YR+0,4 and counter at 3,8% or at least if I understand you correctly why in answer they didn’t show those 2 alternative end results and say like “this result seems better so let’s start with CMC borrows, Counter pays… and so on and so on”. It’s not clear enough or I am simply a child in the mist 🙂Thank you in advance.