I’m stuggling with the EOC question #3 from reading 34.
In the question, they say :
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My question is, where does this “2,5” come from? As per my understanding, the terms of the swap were 1. fixed leg with 6% 2. floating leg with LIBOR.
It’s September still though.
^ It’s practically the end of September. Tempus fugit!!
Hard to believe that 2006 was 15 years ago already.
Company is receiving 7% and Libor while company is paying 6% and 2.5 times Libor. 2.5 is the multiplication factor to be used on prevailing Libor rate.