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Financing Trade - Corporate A holds 10% of a large blue chip corporate B, which has a $500m notional - Daily average volume traded is

Financing Trade

- Corporate A holds 10% of a large blue chip corporate B, which has a $500m notional - Daily average volume traded is $50m and volatility is 30% - Corporate A is looking to gain financing against the $500m of stock for 1 year

Please 1. Draw the diagram if a TRS was used and explain the mechanics 2. What questions should be asked about this transaction? In particular, relationship between A & B? 3. How might we factor in the liquidity?

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