![EBK THE ECONOMICS OF MONEY, BANKING AND](https://www.bartleby.com/isbn_cover_images/9780134734545/9780134734545_largeCoverImage.gif)
A swap agreement calls for Durbin Industries to pay interest annually, based on the one year T bill rate, currently 6%, plus 1.5%. In return, Durbin received interest at a rate of 6% on a fixed rate basis. The notional principal for the swap is $50,000. What is Durbin’s net interest for the year after entering into the agreement?
Context Introduction:
The Durbin’s industries are paying the interest rate normally on an annual basis which is based on the T bill rate (Treasury bill rate). T bill is a short term debt obligation backed by the treasury department of the country. The principal amount is $50,000. The interest paid is on T bill rate of 6% + 1.5% and in return the industry will get a fixed rate of 6%.
![Check Mark](/static/check-mark.png)
Want to see the full answer?
Check out a sample textbook solution![Blurred answer](/static/blurred-answer.jpg)
Chapter 14 Solutions
EBK THE ECONOMICS OF MONEY, BANKING AND
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
![Text book image](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
![Text book image](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)