hi All this is reference Question 10 on page 300 of book 5 of schweser how do they get value of fixed swap as .9940 times 5,050,000 ? page 304 Isn;t the notional principal 5 million so how they get the figure above of 5,050,000 how do i tackle equity swaps please advice ?

Fixed side Fixed payments are 4% p.a. made quarterly so each paymet is 0.04 x (90/360) = $50,000. In 60 days the value must be par i.e. $5,000,000. Therefore total value today = dicounted value of $5,050,000 in 60 days = $5,050,000 x 0.9940 = $5,019,700. Floating side Floating return = (3,150 - 3,000)/3,000 = 5%. Value tioday is 5% return + notioanl value today = 1.05 x $5,000,000 = $5,250,000 Value of bond to bank today (the fixed payer) = $5,250,000 - $5,019,700 = $230,300

Haven’t seen the question yet, but Hurricane that was a great response…nice work