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Ask the Tutor ACCA AFM

Interest Swap

Former userFormer user8y ago

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John MoffatJohn MoffatTutor8y ago#1
No. The swap can only benefit one way round. On the figures you have given it can only benefit if A wants variable and B wants fixed. The reason is that in this example, the difference in the fixed rates (3%) is greater than the difference in the floating rates (1%).
John MoffatJohn MoffatTutor8y ago#2
It applies to all swaps. Think about it - there can only ever be a benefit one way round.
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