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John Moffat.
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huiyu98
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Sir may i ask is swap is a OTC arrangement which not flexibility in lapse or exercise?
Because i read from question Pault sep/dec 2016 state that company can choose let the arrangement lapse.Thus i not so sure on my understanding about swap.
John Moffat
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You have misunderstood the examiners answer.
The swap is for 4 years will continue for 4 years and then stop. However the loan lasts for 10 years and so at the end of 4 years they have the choice of either finding a new swap arrangement or stop swapping and start paying at floating rate.
huiyu98
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