A 2-year interest rate swap contract with a constant notional amount of 200,000 is established on...
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A 2-year interest rate swap contract with a constant notional amount of 200,000 is established on January 1, 2021. Under the contract, Corp. A pays fixed interest to Corp. B and Corp. B pays variable interest to Corp. A. You are given the following spot rates: Term (Years) 1 2 Spot Rates As of 1/1/2021 4.50% 4.75% As of 1/1/2022 5.15% 5.40% The underlying loan has a variable interest rate equal to the 1-year spot interest rate in effect at the beginning of the year. Determine the net swap payment at the end of the 2nd year and determine whether this payment is made by Corp. A to Corp. B or by Corp. B to Corp. A. A 2-year interest rate swap contract with a constant notional amount of 200,000 is established on January 1, 2021. Under the contract, Corp. A pays fixed interest to Corp. B and Corp. B pays variable interest to Corp. A. You are given the following spot rates: Term (Years) 1 2 Spot Rates As of 1/1/2021 4.50% 4.75% As of 1/1/2022 5.15% 5.40% The underlying loan has a variable interest rate equal to the 1-year spot interest rate in effect at the beginning of the year. Determine the net swap payment at the end of the 2nd year and determine whether this payment is made by Corp. A to Corp. B or by Corp. B to Corp. A.
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