What are the differences between an option on a bond and an option on a bond futures contract?
Answer to relevant QuestionsWhat is the motivation for the purchase of an over-the-counter option? Answer the below questions. (a) Suppose that at the inception of a five-year interest-rate swap in which the reference rate is 3-month LIBOR the present value of the floating-rate payments is $16,555,000. The fixed-rate ...In determining the cash flow for the floating-rate side of a LIBOR swap, explain how the cash flow is determined. Answer the below questions. (a) For a single-name credit default swap, what is the difference between physical settlement and cash settlement? (b) In physical settlement, why is there a cheapest-to-deliver issue? How are index CDS used by portfolio managers?
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