Purchase Solution

Using the following data, calculate the fixed-rate payer's first two net quarterly payments/receipts for a hypothetical interest rate swap

Not what you're looking for?

Ask Custom Question

Using the following data, calculate the fixed-rate payer's first two net quarterly payments/receipts for a hypothetical interest rate swap described below.

Notional principal $10 million
Fixed rate 7.00%
Days in first quarter 91
Days in second quarter 92
Current LIBOR (LIBOR0) 5.00%
Expected LIBOR (LIBOR1) 5.30%
Expected LIBOR (LIBOR2) 4.80%

Please help me with the formula to obtain the answer.

Purchase this Solution
Solution Summary

This solution assists in determining a quarterly payment for an interest rate swap.

Solution Preview

The fix rate payer in a swap deal will always pay at the fixed rate. ...

Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

SWOT

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

View More Free Quizzes
Related BrainMass Solutions

  • Interest rate swap

    7352 Calculating fixed rate payments in interest rate swaps Using the following data, calculated the fixed-rate payer's first two net quarterly payments/receipts for a hypothetical rate swap described below: Notional Principal $10 million Fixed Rate

  • Calculating effective fixed rate

    Calculate the effective fixed rate on the synthetic fixed-rate loan. The company receives the following cash flows:
    1. LIBOR (swap agreement receipt).
    Total receipts = LIBOR.

  • Quarterly Swap Payments for ABC Limited

    469861 Quarterly Swap Payments for ABC Limited A manufacturing company, ABC Limited, which makes motor components, has taken a floating-rate loan from its bank and wishes to swap this liability for a fixed-interest rate exposure.

  • Swap driven financing the defining features of interest

    The World Bank could then borrow from US investors, planning to use the US dollar receipts from the currency swap to make payments bond payments. In this manner, the Swiss franc swap payments to IBM represented the net liability for the World Bank.

  • Plain vanilla, two-year interest rate swap

    7335 Swap fixed rate (SFR) for a plain vanilla, two-year interest rate swap What would be the swap fixed rate (SFR) for a plain vanilla, two-year interest rate swap, payments every six months beginning 07/01/0X, with the following assumptions/data: Swap

  • Zhao Automotive issues fixed-rate debt at a rate of 7.00%.

    Solution: The only equation used would be that the fixed rate debt is issued before the swap, net cash flow would = -7% + 6.8% - LIBOR = -(LIBOR + 0.2%) = Net payment of LIBOR +.2% Zhao Automotive issues fixed-rate debt at a rate of 7.00%.

  • expenditures/GDP

    Calculate (1) net national product (2) (national) income (3) personal income (4) disposable income 2. Consider the following data for a simple economy with only two goods, bread and automobiles.

  • Interest rate (Floating for fixed rate) Swap

    The net payments for a fixed for floating swap are calculated.

  • swap fixed rate (SFR)

    69639 Swap fixed rates What would be the swap fixed rate (SFR) for a plain vanilla, two-year interest rate swap, payments every six months beginning 07/01/0x, with the following assumptions/data: Swap initiation, January 1, 200x FRA1,0 = 2.221%

View More Related Solutions