Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need an example of an interest rate swap where I am the dealer and in the interest rate swap (between two companies) I have

I need an example of an interest rate swap where I am the dealer and in the interest rate swap (between two companies) I have to make a spread of 50 basis points (0.5%).

For example, Company A has an investment of $10,000 with a fixed interest rate of 9.5% and Company B has an investment of $15,000 with a floating interest rate of 10%. Company A wants to move to a floating interest rate and B wants to move to a fixed interest rate. Somehow I as the dealer needs to earn 0.5%. The math used is just an example so you can change it to whatever will work.

This was just my example I created to show what I am looking for you can add more detail if needed. I am confused how the swap dealer would earn 50 basis points so I am not sure how I would do the math to make this happen?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Campaign Finance Reform

Authors: Melissa M. Smith, Glenda C. Williams, Larry Powell, Gary A. Copeland

1st Edition

ISBN: 0739145657, 978-0739145654

More Books

Students also viewed these Finance questions

Question

c. What groups were least represented? Why do you think this is so?

Answered: 1 week ago

Question

7. Describe phases of multicultural identity development.

Answered: 1 week ago