Chapter 15/SWAPS

1. Given Corporation XYZ has set p a 4-year Swap. Show all work and briefly discuss your results.

• We have a 4-year SWAP
• Exchange fixed payments @ 6%
• Floating payments are LIBOR +2
• Rate(s) for each year are 4%, 6%, 9%, 11%

1. Calculate the net dollar received or paid by XYZ what does this mean?
2. Calculate the dollar amount received or paid by the other party on interest rate SWAP.