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Sir
I notice that they do not include the +60 points in doing the calc to get to 3.7625. i do see it says not to include the 20 points but nothing about the 60
Other book examples I have always include the extra on top of libor
Please explain
They only pay the extra 60 points if they are borrowing themselves.
For part (a) they are paying Ratus 3.7625% and receiving LIBOR from Ratus. The question is quite specific about this and asks what the net receipt/payment will be.
It is only in part (b) that the 60 points are relevant because there is is showing how the swap works.
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