SPG is a US MNC that has operations in Europe, the Middle East, and Africa. It has identified needs of leverage of USD24 million in 7 months for a six-month period. To lock in the rate on this loan, SPG sells a forward rate agreement on LIBOR6 at 5.839% to HSBC for a notional principal of USD255 million? In 7 months' time, LIBOR6 is 4.173%? How much will SPG pay to HSBC assuming 360 days in a year?

Answer rating: 100% (QA)

To calculate the amount that SPG will pay to HSBC we need to determine the difference b... View the full answer