The up-front payment that is required to make counterparty to take the other side of the swap. Assuming notional principal is $10 million. Introduction: Interest rate swap: Swapping is nothing exchange of a thing for another thing. When two parties agree that they will exchange one stream of interest payments for another in a given set of the period, the interest rate has to be considered as an interest swap rate.

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Chapter 23, Problem 24PS

Summary Introduction

To compute:The up-front payment that is required to make counterparty to take the other side of the swap. Assuming notional principal is $10 million.

Introduction:

Interest rate swap: Swapping is nothing exchange of a thing for another thing. When two parties agree that they will exchange one stream of interest payments for another in a given set of the period, the interest rate has to be considered as an interest swap rate.

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