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Assume that you are a swap dealer and have just acted as a counterparty in an interest rate swap. The notional principal for the swap
Assume that you are a swap dealer and have just acted as a counterparty in an interest rate swap. The notional principal for the swap was $7.5 million and you are now obligated to make five annual payments of 8 percent interest. The floating rate that you will receive is 8.2 percent, and the floating payments to you are annual as well.
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