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Question of the Week - Derivatives

AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
edited March 2016 in Level 1 Questions

Haspiess Systems, Inc. and Signicomp Manufacturing enter into a netted interest rate swap, with a notional $75M. Haspiess will pay a fixed 5%, and Signicomp will pay LIBOR + 75bp. LIBOR is 3.5%. The first semiannual payment will be closest to:

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Question of the Week - Derivatives 14 votes

Haspiess paying Signicomp $600,000
42%
LDifranscarebaermdlynch3gahamiltBlueJay3535Freddie 6 votes
Signicomp paying Haspiess $600,000
0%
Haspiess paying Signicomp $300,000
57%
AdaptPrepStuj79googs1484riteshbadaiBeregondpabulumsnicolincoaaronpcjb 8 votes

Comments

  • AdaptPrepAdaptPrep Des Moines, IA, USAPosts: 211 Sr Associate
    Haspiess paying Signicomp $300,000

    The amount Haspiess owes is 0.5 * $75,000,000 * 5% = $1,875,000.

    The amount Signicomp owes is 0.5 * $75,000,000 * (3.5% + 0.75%) = $1,593,750.

    The net payment will be Haspiess paying Signicomp $281,250.

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