CFA Practice Question

There are 206 practice questions for this study session.

CFA Practice Question

Consider a two-year plain-vanilla swap. Fixed rate is 6%. Libor is currently 5.5%. Notional principal is $10 million. Who pays whom how much when the swap is originated?
A. Fixed receiver pays the fixed payer $25,000.
B. Fixed payer pays the fixed receiver $50,000.
C. Nobody pays anybody anything.

User Contributed Comments 8

User Comment
shasha except for "in-advance" swap?
nchilds this question is making an inferential reference to currency swaps, where each party makes an intial swaps of currency at origination.
danlan It's a interest swap, so no principal is exchanged at the beginning, right?
george2006 At origination, no one pays anyone anything. But in settlement dates later, they were settle on notational amt * (rate difference)
labsbamb ok currency swap exchange of notional amount at the beginning
interest swap no exchange by each party at the begi ning,and settle on notional amt * (rate difference).
boddunah plain vanilla swap
rana1970 in swap, floating rate is set in advance and paid in arrear.
tricorp Good one...
You need to log in first to add your comment.