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Please explain why are we not adding the basis point prior to calculating interest receivable?? why not add 0.6 to the forward rates first??
Although the bond interest itself is based on the spot yield curve plus 60 bp’s, the swap that is being offered is to exchange a fixed rate for a variable amount based on the yield curve rate (not on the yield curve rate plus 60 bp’s).
What do I look for in such questions to grasp that we do not need to add bps in our working?
It is really down to the wording. However the extra 60bp’s is relevant for the company own borrowings because of their credit risk. General rates (and traded instruments) are not geared just to one particular company and so the company own credit risk is irrelevant.