Hewitt Inc. has entered into an equity swap arrangement that allows it to swap a fixed interest
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Question:
Hewitt Inc. has entered into an equity swap arrangement that allows it to swap a fixed interest rate of 8 percent in exchange for the rate of appreciation on the Dow Jones Industrial Average each year over a three-year period. The notional principal is $1 million. If the Dow depreciates by 1 percent, Hewitt will:
have to make a payment of $70,000.
have to make a payment of $90,000.
receive a payment of $70,000.
receive a payment of $90,000.
Expert Answer:
In this scenario Hewitt Inc will receive a payment of 70000 Heres why Equity Swap An equity swap all... View the full answer
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