Consider a $15 million interest-rate swap in which cash flows based on a fixed rate of 5% (with semi-annual compounding) are exchanged for 6-month LIBOR. The swap has a remaining life of 9 months. The 6-month LIBOR that was observed three months ago was 4.85% (with semi-annual compounding). The forward LIBOR for the period between 3 months and 9 months (from today) is 6.14% (with semi-annual compounding). The risk-free rates for 3 months and 9 months are 5.3% and 5.8%, respectively, with continuous compounding. Calculate the value of the swap to the party receiving the fixed rate.

A 3/1 ARM is made for $250,000 at 7 percent with a 30-year maturity. Fixed payments are to be made monthly for three years, after which the interest rate will reset. Refer to the original question (1, 2), assuming the INTEREST RATE CAP of 2%, what would new payments be beginning in year 4 if the interest rate instead rose to 10%? Hint: the capped rate does not allow the new rate to go above certain point. (question one was If the loan is fully amortizing, what will be the monthly payments? 1663.26; and question two was What will be the loan balance after three years? 241,817.41) Please asnwer as excell format using rate, NPER. PV, FV, and PMT

A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss.  The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a six-month Eurodollar loan and having accepted a three-month Eurodollar deposit. The agreement rate with the buyer is 4.6%.  There are actually 92 days in the three-month FRA period. Which one of following statements is correct?     Group of answer choices   If the settlement rate is 4.8% three months from today, then the buyer pays the seller.     To hedge the loss caused by maturity mismatch, the bank should be a seller of the FRA.     Without the FRA, the bank will lose if the market interest rate drops at the end of three months.     If the settlement rate is 4.8% three months from today, then the FRA is worth $1009.84   To hedge the risk caused by maturity mismatch, the bank could take the buyer’s position if it uses the Euro-Dollar Interest Rate Futures…

A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss.  The purpose of the FRA is to cover the interest rate risk caused by the maturity mismatch from having made a six-month Eurodollar loan and having accepted a three-month Eurodollar deposit. The agreement rate with the buyer is 4.6%.  There are actually 92 days in the three-month FRA period. Which one of following statements is correct?     Group of answer choices To hedge the risk caused by maturity mismatch, the bank could take the buyer’s position if it uses the Euro-Dollar Interest Rate Futures instead.   To hedge the loss caused by maturity mismatch, the bank should be a seller of the FRA.     If the settlement rate is 4.8% three months from today, then the buyer pays the seller.     If the settlement rate is 4.8% three months from today, then the FRA is worth $1009.84     Without the FRA, the bank will lose if the market interest rate drops at the end of three months.