A bank has entered into an interest rate swap. The swap has a notional principal amount of
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A bank has entered into an interest rate swap. The swap has a notional principal amount of $100 million and calls for the bank to make annual fixed interest rate payments of 5 percent and to receive an annual floating interest rate payment of LIBOR plus 2 percent. If LIBOR is 1 percent, what payment will the bank make or receive?
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Financial Institutions, Markets and Money
ISBN: 978-1119330363
12th edition
Authors: David S. Kidwell, David W. Blackwell, David A. Whidbee, Richard W. Sias
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