Interest rate swap
SNAP agrees to pay 1.5% per annum on a notional $8 million at 6 month intervals for 10 years. In return SNAP will receive a floating rate on the $8 million over the same time perid from HSBC. HSBC will pay floating=LIBOR+ 25bp =(LIBOR+0.25%). Current LIBOR is quoted at 1% per annum.
What is the floating rate HSBC pays?
Who is long?
Who is short?
At the first swap interval (6 month), what is the net payment and by whom?
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QUESTION # 2 Consider a 1-year swap initiated on January 10th, 2013, between Sony and Samsung, Under the terms of the swap contract Sony is agreed to pay Samsung an interest of 6% per annum on a...
QUESTION # 2 Consider a 1-year swap initiated on January 10th, 2013, between Sony and Samsung, Under the terms of the swap contract Sony is agreed to pay Samsung an interest of 6% per annum on a notional principle of Max. Marks 2+1] $200 n Samsung agrees to pay a 3-month LIBOR rate on the same principal. In addition, the payments are exchanged every three months, andthe6%is quoted with quarterly compounding. Following Table shows the LIBOR Samsung (complete the Table...
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Consider the following information about an interest rate swap: two-year term, semiannual payment, fixed rate = notional USD 10 million. Calculate the net coupon exchange for the first period if LIBOR is 5% at the beginning of the period and 5.5% at the end of the period Q2. 6%, floating rate = LIBOR + 50 basis points, A. Fixed-rate payer pays USD 0 B. Fixed-rate payer pays USD 25,000 C. Fixed-rate payer pays USD 50,000 D. Fixed-rate payer receives USD...
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Alpha Corporation and Horizon Ltd have decided to go into a plain vanilla interest rate swap, Alpha pays a fixed interest rate of 6% pa while Horizon pays floating rate based on Libor rate. The notional amount is $10 Million. Based on the rates given calculate each payoff on semiannual basis lull '2001 | 54% 341201| 65% jan 12003 | I'Y% 3.4 , | 12%.
QUESTION # 2 Consider a 1-year swap initiated on January 10th, 2013, between Sony and Samsung, Under the terms of the swap contract Sony is agreed to pay Samsung an interest of 6% per annum on a notional principle of Max. Marks 2+1] $200 n Samsung agrees to pay a 3-month LIBOR rate on the same principal. In addition, the payments are exchanged every three months, andthe6%is quoted with quarterly compounding. Following Table shows the LIBOR Samsung (complete the Table...
Faise QUESTION 21 Boeing has entered into 10 year interest rate swap with Bank America with a notional principal of $500 million. Boeing has agreed to pay LIBOR- the floating rate side of the swap, Bank America haségreed to pay a fixed rate of 5.75%. Assume that next year, LIBOR is 6.5%. The net payment at that date will be Boeing pays Bank America $2,500,000 Bank America pays Boeing $5,000,000 Bank America pays Boeing $507,500,000 Bank America pays Boeing $3,750,000...
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Alpha Corporation and Horizon Ltd have decided to go into a plain vanilla interest rate swap, Alpha pays a fixed interest rate of 6% pa while Horizon pays floating rate based on Libor rate. The notional amount is $10 Million. Based on the rates given calculate each payoff on semiannual basis lull '2001 | 54% 341201| 65% jan 12003 | I'Y% 3.4 , | 12%.
Alpha Corporation and Horizon Ltd have decided to go into a plain vanilla interest rate swap, Alpha pays a fixed interest rate of 6% pa while Horizon pays floating rate based on Libor rate. The notional amount is $10 Million. Based on the rates given calculate each payoff on semiannual basis lull '2001 | 54% 341201| 65% jan 12003 | I'Y% 3.4 , | 12%.
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