in ur exmples u have given which rate the company is using now in exams we arent provided with that info so we do assume that the company is using fixed rate and would like to hedge against floating rate
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swaps
4y ago#1Most questions make it clear by implication in the wording. However even if it is not made clear in the wording (which is very unusual) then a swap can only make a benefit one way round and it does not take long to work out which way round it will have to be.
in Q44 where have they stated it is being used fixed rate
And should the amount we add / Deduct to equal it to the end result has to be same
In Q39) the benefit of 0.2 will be get when we borrow at floating and then swap to fixed but in the ans it says the other way round
4y ago#3I do now know which book you are referring to when you stated the numbers of the questions.
these question are from BPP
4y ago#5I have been abroad on vacation for a week and I do not have the Revision Kits with me. I will be home tomorrow, so please ask again tomorrow and then I will be able to help you.
sorry for disturbing u
hope u had a great vacation and hope u r back home
4y ago#7No problem :-)
You can find a full explanation of the swap in Q44 here:
https://opentuition.com/topic/keshi-co-1214-part-a-swap/
For Q39, I am a bit puzzled because in the current edition of the BPP Kit there is no swap in this question.
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