A U.S. company has entered into an interest rate swap with a dealer in which the notional principal is $50 million. The company will pay a floating rate of LIBOR and receive a fixed rate of 5.75 percent. Interest is paid semiannually, and the current LIBOR is 5.15 percent. Calculate the first payment. Assume that floating-rate payments will be made on the basis of 180/360 and fixed-rate payments will be made on the basis of 180/365. a. $130,308.20, the floating-rate payer will receive b. $130,308.20, the fixed-rate payer will receive c. $50 million, the fixed-rate payer will pay d. $50 million, the floating-rate payer will pay
A U.S. company has entered into an interest rate swap with a dealer in which the notional principal is $50 million. The company will pay a floating rate of LIBOR and receive a fixed rate of 5.75 percent. Interest is paid semiannually, and the current LIBOR is 5.15 percent. Calculate the first payment. Assume that floating-rate payments will be made on the basis of 180/360 and fixed-rate payments will be made on the basis of 180/365. a. $130,308.20, the floating-rate payer will receive b. $130,308.20, the fixed-rate payer will receive c. $50 million, the fixed-rate payer will pay d. $50 million, the floating-rate payer will pay
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A U.S. company has entered into an interest rate swap with a dealer in which the notional principal is $50 million.
The company will pay a floating rate of LIBOR and receive a fixed rate of 5.75 percent. Interest is paid semiannually,
and the current LIBOR is 5.15 percent. Calculate the first payment. Assume that floating-rate payments will be made
on the basis of 180/360 and fixed-rate payments will be made on the basis of 180/365.
a. $130,308.20, the floating-rate payer will receive
b. $130,308.20, the fixed-rate payer will receive
c. $50 million, the fixed-rate payer will pay
d. $50 million, the floating-rate payer will pay
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