Mention 3 types of traders [3] Question 7 Dr. VK Investment ce has an existing debt of NS 2000000 on which it makes annual payments at an annual effective rate of LIBOR plus 0.5. Dr. VK Investment ce decides to enter a swap with a notional amount of NS 2000000 on which it makes annual payments at a fixed annual effective rate of 3% in exchange for receiving annual payments at the annual effective LIBOR rate. The annual effective L.IBOR rates over the first and second years of the swap contract are 2.5% and 4% respectively. Dr. VK Investment ce does not make or receive any other payments. Calculate the net interest payment that Dr. VK Investment ce makes in the second year. [8] Question 8 The table below shows the spot rates for the given lengths of time. Calculate the swap rate for a two- year deferred, three- year interest rate swap with settlement at the end of the year. [10] Mention 3 types of traders [3] Question 7 Dr. VK Investment ce has an existing debt of NS 2000000 on which it makes annual payments at an annual effective rate of LIBOR plus 0.5. Dr. VK Investment ce decides to enter a swap with a notional amount of NS 2000000 on which it makes annual payments at a fixed annual effective rate of 3% in exchange for receiving annual payments at the annual effective LIBOR rate. The annual effective L.IBOR rates over the first and second years of the swap contract are 2.5% and 4% respectively. Dr. VK Investment ce does not make or receive any other payments. Calculate the net interest payment that Dr. VK Investment ce makes in the second year. [8] Question 8 The table below shows the spot rates for the given lengths of time. Calculate the swap rate for a two- year deferred, three- year interest rate swap with settlement at the end of the year. [10]