Question

Question 11 Not yet answered Marked out of 1.00 pFlag question CX Airline and HS Bank decide to swap $1 million loans. CX Airline currently pays 9.0% fixed and HS Bank pays 8.5% on a LIBOR + 0.5% loan. If CX Airline swap their fixed loan for a LIBOR + 0.5% loan and LIBOR rises to 8.5%, how much is the payment (negative sign for receipt) from CX Airline to HS Bank? Answer: Question 12 Not yet answeredMarked out of 1.00 Flag question RT Investment management enters into a total return swap. They swaps 50% of $50 million index based portfolio for 4.5% yield bonds. If the annualized total return on the index is 2.5%, what net cash flow will the manager experience under the swap agreement? Answer:

Answer 1

ANS11:- CX Airline will pay nothing to HS Bank.

ANS12:- ($25 million*2.5% )+ ($25million*4.5%)

=$1750000