Swaps

Your firm just made a 3-year fixed-rate loan at 8.25%. You would like to convert this to a floating- rate loan that is priced based on 3-momth LIBOR as the base rate. Explain how you could use a basic interest rate swap to accomplish this. Using the data from Exhibit 9.8 (shown above), choose swap teams that convert this fixed-rate loan to a floating- rate loan and demonstrate the resulting rate you would earn on the loan from adding the swap to loan position. Your firm just made a 3-year fixed-rate loan at 8.25%. You would like to convert this to a floating- rate loan that is priced based on 3-momth LIBOR as the base rate. Explain how you could use a basic interest rate swap to accomplish this. Using the data from Exhibit 9.8 (shown above), choose swap teams that convert this fixed-rate loan to a floating- rate loan and demonstrate the resulting rate you would earn on the loan from adding the swap to loan position