Week 13 review questions
金融市场作业代写 Describe the sequence of payments for a 5 year, 6 monthly plain vanilla interest rate swap where A pays to B GBP 10%, and receives
- What is the difference between a swap and a forward contract? 金融市场作业代写
- Describe the sequence of payments for a 5 year, 6 monthly plain vanilla interest rate swap where A pays to B GBP 10%, and receives USD9% on a notional principal of GBP10m
- Using the information in Q2 what is the equivalent expression of the swap in forward contracts? Does A have a short or long position?
How is a total return swap different from a credit default swap? 金融市场作业代写
- If B has an absolute advantage over A in fixed and floating rate debt markets, is a mutually beneficial swap possible? Explain.
- Examine the payoff table on p425 of Bailey. If the swap payment was renegotiated such that A paid 9.5%, how would other payments and the payoffs be impacted?
- Above what required payment for A under the swap (p425) would the swap cease to be feasible? Why? 金融市场作业代写
- Examine the payoff table on p427 for a foreign exchange swap. Why is the intermediary exposed to currency risk? (How is it funding its required payments?)
- How can the intermediary hedge its risk? Provide an outline of the trade it would need to make.
- Outline 2 major risks with swap contracts. Discuss whether and how these risks could be correlated. 金融市场作业代写
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