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sandyorange (November 30, 1999 at 12:00 am)
great explanation but what does the bank mean when they quote us 4.00%-4.25% on a 5 yr USD IRS to a customer?
mo0rie (November 30, 1999 at 12:00 am)
gr8 vid cheers mate
TheRainbow009 (November 30, 1999 at 12:00 am)
the concept is simple but explanation is complicated.
geoxlee (November 30, 1999 at 12:00 am)
Thanks for the video, David! You state the purpose of the swap, the motivation of each player, and how it actually works. I have read several text, and your short seven minute video explains better than reading hours of text.
magicskyfairy69 (November 30, 1999 at 12:00 am)
CFA L2 won't have transaction costs. this is making it a bit more complicated than it needs to be, and usually it takes the perspective of the fixed payer, floating receiver, rather than trying to describe both simultaneously ( just easier to show it that way).
lovethyANGELS (November 30, 1999 at 12:00 am)
@adamish1134 this guy is a dunce. He is making this more complicated then it needs to be.
obsdj (November 30, 1999 at 12:00 am)
@juggles24
wrong. look again, it receives 5-0.015 = 4.985% and not 5+0.015=5.015%, and pays 5.2%, thus netting 5.2-4.985= 0.215% or 21.5bps!
juggles24 (November 30, 1999 at 12:00 am)
Co A's net obligation after the SWAP would be LIBOR + 18.5 bps and not 21.5 bps. This is because it PAYS 5.2% to the bond holders and receives 5.015% from the FI. 5.2(-)5.015 = 0.185 = 18.5 bps.
adamish1134 (November 30, 1999 at 12:00 am)
As an econ major I need to say that it sickens me to see the level of complication which our banking system has attained just to survive. We're seriously fucked.
brunetto345 (November 30, 1999 at 12:00 am)
libor = london interbank offer rate
100 basis points = 1% |