Interest rate swap
June 21, 2010 - 3:24 pm
This illustrates how an interest rate swap can transform a floating-rate obligation into a fixed-rate obligation and vice-versa
Duration : 0:7:4
This illustrates how an interest rate swap can transform a floating-rate obligation into a fixed-rate obligation and vice-versa
Duration : 0:7:4
June 21st, 2010 at 3:24 pm
gr8 vid cheers mate
gr8 vid cheers mate
June 21st, 2010 at 3:24 pm
the concept is …
the concept is simple but explanation is complicated.
June 21st, 2010 at 3:24 pm
Thanks for the …
Thanks for the video, David! You state the purpose of the swap, the motivation of each player, and how it actually works. I have read several text, and your short seven minute video explains better than reading hours of text.
June 21st, 2010 at 3:24 pm
CFA L2 won’t have …
CFA L2 won’t have transaction costs. this is making it a bit more complicated than it needs to be, and usually it takes the perspective of the fixed payer, floating receiver, rather than trying to describe both simultaneously ( just easier to show it that way).
June 21st, 2010 at 3:24 pm
@adamish1134 this …
@adamish1134 this guy is a dunce. He is making this more complicated then it needs to be.
June 21st, 2010 at 3:24 pm
@juggles24
wrong. …
@juggles24
wrong. look again, it receives 5-0.015 = 4.985% and not 5+0.015=5.015%, and pays 5.2%, thus netting 5.2-4.985= 0.215% or 21.5bps!
June 21st, 2010 at 3:24 pm
Co A’s net …
Co A’s net obligation after the SWAP would be LIBOR + 18.5 bps and not 21.5 bps. This is because it PAYS 5.2% to the bond holders and receives 5.015% from the FI. 5.2(-)5.015 = 0.185 = 18.5 bps.
June 21st, 2010 at 3:24 pm
As an econ major I …
As an econ major I need to say that it sickens me to see the level of complication which our banking system has attained just to survive. We’re seriously fucked.
June 21st, 2010 at 3:24 pm
libor = london …
libor = london interbank offer rate
100 basis points = 1%
June 21st, 2010 at 3:24 pm
what is LIBOR?how …
what is LIBOR?how is it paid?what is basis point?do we pay basis point?
June 21st, 2010 at 3:24 pm
no company A …
no company A receives (5%-1.5 bps), you made a mistake with the sign, so that is Libor +21.5. Otherwise you are right with what you typed.