Is the swap attractive to round rock national


Problem: Round Rock National Bank lent $1,000,000 to Block Watne Homes, with very substantial collateral, at a floating rate pegged at 2% above the T-Bill rate. The Bank borrowed $1,000,000 in Eurodollars from HSBC Bank in England, at 1% over LIBOR (London Interbank Offered Rate). Round Rock National's correspondent, Citicorp, offered to arrange a swap with $1,000,000 principal that would allow Round Rock to receive interest at 1% over LIBOR and pay at 1% over T-bill. Is the swap attractive to Round Rock National?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Is the swap attractive to round rock national
Reference No:- TGS01801128

Now Priced at $25 (50% Discount)

Recommended (96%)

Rated (4.8/5)