One party pays a fixed rate of 55 percent based on the


Consider a $100 million equity swap with semi-annual payments. When the swap is established, the underlying stock is at 1,215.52. One party pays a fixed rate of 5.5 percent based on the assumption of 30 days per month and 360 days in a year. If the stock index is at 1,275.89 on the first payment date, calculate the net swap payment, indicating which party pays it.

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Risk Management: One party pays a fixed rate of 55 percent based on the
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