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Good day sir
I am having little difficulty with understanding who receive and pay what in an interest rate swap with reference to the article on Acca website currency swap.
In you lecture i understand but in the article not sure how the got barrow receives 2.9% and what he pays etc
If Barrow did their own floating rate borrowing, then they would pay E + 1.5%.
Since there is a saving through swapping of 0.8% each (before the bank fee), they must end up paying E + 0.7% (before the bank fee).
In order to do the swap they borrow fixed at 3.6%, they pay E to Greening (so they are now paying in total E + 3.6%) and so to end up paying E + 0.7% they must receive from Greening 3.6 – 0.7 = 2.9%
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Hi
@johnmoffat said:
You are welcome 🙂Hello sir, I wrote the P4 exam yesterday and wanted to know if ACCA will penalise me. I had started the hedging question stuck; I later realised that the NPV was more straightforward so I started answering that but couldn’t finish as time was far spent? I did not cancel any of them as I’ve been told not to cancel answers. Will they penalise me by picking the worst two? I’m really worried here. Thank you
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@johnmoffat said:
Don’t worry. They will realise what has happened.Thank you sir
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