Question: Suppose a trader has entered two $ 15 million notional amount equity swaps both with a fixed rate of 6 percent, paid quarterly on the

Suppose a trader has entered two $ 15 million notional amount equity swaps both with a fixed rate of 6 percent, paid quarterly on the basis of 90 days in the quarter and 360 days in the year. The first swap is a receive fixed and pay three-month total return on Apple, Inc. The second swap is a receive three-month total return on Microsoft, Inc., and pay fixed swap. Explain the net cash flows from this portfolio as well as identify the market risk?

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