Commercial bank A and Savings bank B entered into a swap contract. The swap has a notional principal amount of $100 million and calls for Commercial Bank A to make annual floating interest rate payment of LIBOR minus 1% to Savings Bank B. In return, Savings Bank B pays fixed 8% interest rate to Commercial Bank A. If LIBOR is 8%, what is the net payment? Commercial Bank A Savings Bank B Savings Bank B pays Commercial Bank A by $1 million Commercial Bank A pays Savings Bank B by $1 million Net pay is 0 Can’t get the answer based on the given information
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Commercial bank A and Savings bank B entered into a swap contract. The swap has a notional principal amount of $100 million and calls for Commercial Bank A to make annual floating interest rate payment of LIBOR minus 1% to Savings Bank B. In return, Savings Bank B pays fixed 8% interest rate to Commercial Bank A. If LIBOR is 8%, what is the net payment? Commercial Bank A Savings Bank B
- Savings Bank B pays Commercial Bank A by $1 million
- Commercial Bank A pays Savings Bank B by $1 million
- Net pay is 0
- Can’t get the answer based on the given information
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