Buy?
buy receiver
^^ Thank God. My brains had stopped working by that time.
Hmm… Can’t remember which of the two I even put! He wanted to participate if rates went up right?? So he’d exercise to receive fixed if they kept heading down??
receiver swaption
yeah exactly he wanted to hedge the downside, so he entered into an option to recieve a fixed rate, pay floating - but no exercise and he can participate in the up
how about the floor on interest? another way is to get a put packege and sell a call packege?
yayaya!! I guessed on Buying a receiver swaption too… +1
he had floating rate debt, he needed to receive fixed to hedge, as it was a swaption he would have to be on the buy side to enforce it. I think I went with buy payer .
Right, hope that wasn’t the second brain fart I’ve caught. Definately have the concept down, but it seems like I was running out of steam in the afternoon.
and any one remember a quetion with -1000 or +1000 or 0 …i think it is about the value of the swapation, something requires comparison of strike interest rate and on-going libor rate … i choce 1000
buy receiver swaption. Wanted option to hedge downside (receive fixed payments if rate dropped below strike) but take advantage of potential upside rate moves.
I bought receiver.
It wasn’t buy receiver, it was buy payer as he wanted to gain exposure to an increase in rates. Buying receiver would replicate the hedge he already had.
its either buy receiver or sell payer…i tried to out think the question and ended up writing sell payer…now is that right ?
Why would he sell? He wanted to have the option. If he wanted to have the option, he had to buy. It was buy receiver.
singlesong80 Wrote: ------------------------------------------------------- > and any one remember a quetion with -1000 or > +1000 or 0 …i think it is about the value of the > swapation, something requires comparison of strike > interest rate and on-going libor rate … i choce > 1000 it was 25000 as quarterly payment on Floor 3.5-3.4 * Notional Capital
cfaboston28 Wrote: ------------------------------------------------------- > singlesong80 Wrote: > -------------------------------------------------- > ----- > > and any one remember a quetion with -1000 or > > +1000 or 0 …i think it is about the value of > the > > swapation, something requires comparison of > strike > > interest rate and on-going libor rate … i > choce > > 1000 > > > it was 25000 as quarterly payment on Floor 3.5-3.4 > * Notional Capital 25k was not an option so i went with 100
florinpop Wrote: ------------------------------------------------------- > > 25k was not an option > so i went with 100 You either had a different test or you’re not remembering the right question. On my test, the choices were: -100,000 0 25,000 100,000 Correct answer: C. 25,000.
Yeah I think I got 25k too. I’m mixing up my numbers though after 2 days. They were fresh on my mind right after the exam but all I remember now is the qualitative stuff.