Describe who would use a swap and why? How many different types of swaps are they and why? Describe how a company might benefit from interest rate currency swaps?
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Describe who would use a swap and why? How many different types of swaps are they and why? Describe how a company might benefit from interest rate currency swaps?
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- Demonstrate how interest rate and currency swaps are constructed and discuss the comparative advantage argument used to illustrate the popularity of swaps.discuss the motives a company may have for engaging in currency and intrest rate swapsFINANCIAL RISK MANAGEMENT Briefly explain what is Interest Rate Swap and who are the parties in an Interest Rate Swap?
- What is credit default swap and why is it useful financial productWhat types of risks are interest rate andexchange rate swaps designed to mitigate?Why might one company prefer fixed-rate payments while another company prefers floating-ratepayments, or payments in one currency versusanother?What are credit default swaps and how do they work?
- Explain with examples how to measure exchange rate risk for long positions and short positions Notes : Use your own numbers in making calculations!Interest Rate Swap: A company that expects interest rates to rise and wishes to exchange its floating interest rate for a fixed rate would: Select one OA. Enter into a payer swap B. Enter into a receiver swap C. Sell interest rate futures OD. Buy interest rate futuresdiscuss how the banks use interest rate swaps and gap analysis to manage interest rate risk.