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
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Interest rate swap
9y ago#1If 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%
Thank you
9y ago#3You are welcome :-)
9y ago#4Hi
@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
9y ago#5Don't worry. They will realise what has happened.
9y ago#6@johnmoffat said: Don't worry. They will realise what has happened.Thank you sir
9y ago#7You are welcome :-)
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