explain the general variables that one must consider when devising a hedge with futures.       b)describe the characteristics of plain vanilla interest rate swaps.     c)discuss how a pay-fixed, receive-floating swap is equivalent to issuing a fixed-rate bond and purchasing a floating-rate bond.       d)explain the importance of valuation of swaps.       e) describe basis swap and the process for pricing a basis swap.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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a)explain the general variables that one must consider when devising a hedge with futures.
 

 

 

b)describe the characteristics of plain vanilla interest rate swaps.

 

 

c)discuss how a pay-fixed, receive-floating swap is equivalent to issuing a fixed-rate bond and purchasing a floating-rate bond.

 

 

 

d)explain the importance of valuation of swaps.
 

 

 

e) describe basis swap and the process for pricing a basis swap.

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