A mutual fund has arranged an equity swap with a dealer. The swaps notional principal is $100 million, and the payments will be made semi-annually. The mutual fund agrees to pay the dealer the return on a small-cap stock index, and the dealer agrees to pay the mutual fund based on one of the two specifications given below. The small-cap index starts off at 1,805.20; six months later, it is 1,796.15.

The dealer pays a fixed rate of 6.75% (annualized) to the mutual fund, with payments made on the basis of 180 days in the period and 360 days in a year. Determine the first payment for both parties and, under the assumption of netting, determine the net payment and which party makes it.

The dealer pays the return on a large-cap index. The index starts off at 1,155.14 and six months later is at 1,148.91. Determine the first payment for both parties and, under the assumption of netting, determine the net payment and which party makes it.