2. As a hedge, Darmko buys a two-year cap on a 6 month LIBOR of $10,000,000...
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2. As a hedge, Darmko buys a two-year cap on a 6 month LIBOR of $10,000,000 with current LIBOR at 4%, suppose that in the • • first six months LIBOR rises to 5% second six months LIBOR rises to 6% third six months LIBOR rises to 7% fourth six months LIBOR rises to 9.5% What will be the overall cash position of Darmko, as a holder of both the interest rate swap above and the cap at 4%, at the end of two years? (Assume the cost of the cap is $500,000) (SHOW CALCULATIONS HERE. USE NO TEXT) 1st six months: 2nd six months: 3rd six months: 4th six months: Sum (over two year period) After hedge of the i-rate swap with the cap, the net position of Darmko (1 %) (1 %) (1 %) (1 %) (1) (2) 2. As a hedge, Darmko buys a two-year cap on a 6 month LIBOR of $10,000,000 with current LIBOR at 4%, suppose that in the • • first six months LIBOR rises to 5% second six months LIBOR rises to 6% third six months LIBOR rises to 7% fourth six months LIBOR rises to 9.5% What will be the overall cash position of Darmko, as a holder of both the interest rate swap above and the cap at 4%, at the end of two years? (Assume the cost of the cap is $500,000) (SHOW CALCULATIONS HERE. USE NO TEXT) 1st six months: 2nd six months: 3rd six months: 4th six months: Sum (over two year period) After hedge of the i-rate swap with the cap, the net position of Darmko (1 %) (1 %) (1 %) (1 %) (1) (2)
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Related Book For
Fundamental Accounting Principles Volume 1
ISBN: 9781259259807
15th Canadian edition
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
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