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sir i have another question from your june 2014 lecture, relating to swaps, i dont have trouble understanding the whole process of swap and savings etc but,
1. i have an issue understanding the result calculation y- 0.2%.for cmc and 3.2% for the counterparty, i cant understand that why is cmc is own borrowing a floating charge, its not mentioned anywhere in the question regarding his preference.
2. if he cmc had a preference , would it always mean that his preference would result in interest savings for him or both companies?
His preference would not necessarily mean a saving – he will only do it if it does give a saving.
If you are not told whether he wants to borrow fixed or floating in the exam, you choose whichever ends up giving a saving through swapping.
But sir shouldnt that calculation of end result be based on cmh borrowing fixed and then subtracting saving?
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