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A company and a bank enter into an interest rate swap agreement.The company,which has just borrowed $10 million for five years at the BBSW benchmark
A company and a bank enter into an interest rate swap agreement.The company,which has just borrowed $10 million for five years at the BBSW benchmark rate plus 2% (interest payable every six months), undertakes to pay a fixed rate of interest at 6% every six months on notional principal of $10 million in return for payments from the swap bank at the BBSW. The swap is for five years. At one settlement date, the BBSW is 6.8%.
What is the payment on the swap at this settlement date?
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