What is the value of the swap

Assignment Help Financial Management

Reference no: EM131928364

in an interest rate swap, a financial institution pays 10% per annum and receives three months LIBOR in return on a notional principal of $100 million with payments being exchanged every three months. The swap has a remaining life of 14 months.

The average of the bid and offer fixed rates currently being swapped for three-month LIBOR is 12% per annum for all maturities.

The three-month LIBOR rate one month ago was 11.8% per annum. All rates are compounded quarterly.

What is the value of the swap? Use LIBOR discounting.

Reference no: EM131928364

Questions Cloud

Compute the firms earnings after taxes and earnings : Assuming an ordinary tax rate of 35%, compute the firm's earnings after taxes and earnings available for common stockholders?

Maintain a constant debt-equity ratio : The ratio of total assets to sales is constant at 1, and the profit margin is 9.6 percent. If the firm also wishes to maintain a constant debt-equity ratio

How long will the money last : You have $500,000 for your retirement. Your conservative bond fund earns 8% interest, compounded quarterly. How much money can you withdraw each quarter.

Prepare a worksheet to show the adjusted net income figure : Prepare a worksheet to show the adjusted net income figure for each of the 6 years after taking into account the inventory errors.

What is the value of the swap : The three-month LIBOR rate one month ago was 11.8% per annum. All rates are compounded quarterly.

Estimated value of the stock today : The dividend is expected to remain the same indefinitely. The stock's required return is 10%. The estimated value of the stock today is $________.

How much is to be paid each year : A $50,000 loan obtained today is to be repaid in equal annual installments over the next seven years starting at the end of this year.

Find the beta of the portfolio : You own 500 shares of Stock A at a price of $85 per share, 300 shares of Stock B at $105 per share, and 800 shares of Stock C at $38 per share.

Calculate the net cash provided by operating activities : Net income was $66, 300; accounts receivable decreased by $16, 500. Calculate the net cash provided (used) by operating activities for the period.

User Account

All Pages