Question
1. A company enters into an interest rate swap with a two-year term and a notional amount of $1000. The fixed rate of the swap
1. A company enters into an interest rate swap with a two-year term and a notional amount of $1000. The fixed rate of the swap is 5% and the variable rate is reset annually to the one-year spot rate. Calculate the market value of the swap to the company at the beginning of the second year, when the one-year spot rate is 4%.
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Finance For Executives Managing For Value Creation
Authors: Gabriel Hawawini, Claude Viallet
7th Edition
1473778913, 978-1473778917
