Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › sembilan 6/12
- This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
- AuthorPosts
- June 29, 2019 at 11:15 am #521514
hi
sir i watched your lectures again. now i m bit clear about swap. but in this question the fixed annual rate paid by company confused me.
company want to fix the rate. what we do is opposite. company will go for Y+60 and bank with fixed rate of 3.7625
then they swap
bank will pay yield
company will pay fix 3.7625…but how this amount?
now if we see comparative like if company pay fix and bank on yield total is Y+3.7625
and if company pay floating and bank pay fix then its y+4.4625so first one give low rate and so comparative gain of .6
own
company y+.6-.3=y+0.3
bank 3.7626- .3=3.4625total =y+4.4625
swap
company 3.7625
bank ytotal =y+3.7625
or in this question its different..end result for company is 3.7625
and for bank its yplease help
June 29, 2019 at 2:00 pm #521519The 3.7625 is given in the question – it says that Sembilan would pay Ratus a fixed annual rate of 3.76 1/4 %.
So they will borrow floating and will pay L + 0.6%.
They will received L from Ratus
They will pay Ratus 3.7625%
They will pay a fee of 0.2%So the total net payment is L + 0.6 – L + 3.7625 + 0.2 = 4.5652%, and this is fixed whatever happens to LIBOR.
June 29, 2019 at 10:26 pm #521542thank you sir now i get it 🙂
June 30, 2019 at 9:18 am #521558You are welcome 🙂
- AuthorPosts
- The topic ‘sembilan 6/12’ is closed to new replies.