MYLAB ECONOMICS WITH PEARSON ETEXT -- A
MYLAB ECONOMICS WITH PEARSON ETEXT -- A
5th Edition
ISBN: 2819260099840
Author: Mishkin
Publisher: PEARSON
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Chapter 14, Problem 9Q
To determine

An interest-rate swap that would eliminate the S&L’s income risk from the changes in interest rates if the savings and loan you manage has a gap of -$42 million

Content Introduction:

An interest rate swap is an agreement between two parties in which one party pays a future payment to another party of which interest rate is decided at the present day. This is usually done when there is a difference between floating interest rate and fixed interest rate. If fixed interest rate is more than a floating interest rate, then party in agreement would like to pay principle amount with floating interest rate at the future date.

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