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Interest rate swap - CMC

((deleted)7y ago
Hello, I am revising Swap arrangements and came across the issue where there is not specifacally instructed who wants fixed/floating rate dealing with swaps. Normally, once this is determined we can deduct the saving from the rate and get the end result quickly. However, in case of CMC question, we need to work out first who goes for which rate. In this question, it is a slightly different approach, because once we indentify which combination is better, then the parties borrow the opposite they want and from that position the saving is deducted to arrive at the end result. Here I have some doubts, because normally the saving we deduct from the rate we wanted and in this question, we deduct saving from the rate opposite we wanted. Therefore, I am not clear about this particular approach when is comes to the scenario where we are not told which rate we go for. Thank you in advance for your advice Regards Tomasz Sawa Student ACCA
John MoffatJohn MoffatTutor7y ago#1
You can find my lectures working through the whole of this question linked from the following page: https://opentuition.com/acca/afm/afm-revision-lectures/
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