A portfolio manager wishes to reduce his exposure to equities without selling stocks in the portfolio. The portfolio manager decides to enter into an equity swap with a dealer. The portfolio manager agrees to pay the return on the S&P 500 index in exchange for receiving an annualized fixed rate of 3.5%. The terms of the swap call for quarterly settlement (90 days per period) using a 360 day-year convention. The notional principal is $75 million. At inception of the swap, the S&P 500 index was 1, 800. Three months after swap inception, on the first quarterly settlement date, the S&P 500 index was 1, 746. Six months after swap inception, on the second quarterly settlement date, the S&P 500 index was 1, 773 Which of the following will most likely take place on the first swap settlement date? To settle the swap (to the nearest dollar), the portfolio manager: a) pays the dealer $2, 906, 250. b) pays the dealer $1, 593, 750. c) receives $1, 593, 750 from the dealer. d) receives $2, 906, 250 from the dealer. Which of the following will most likely take place on the second swap settlement date? To settle the swap (to the nearest dollar), the portfolio manager: a) pays the dealer $503, 544. b) pays the dealer $1, 159, 794. c) receives $503, 544 from the dealer. d) receives $1, 159, 794 from the dealer