L***z
发帖数: 454 | 1 I am very fucked in SWAP because the Schweser book is very confusing. On
Page 230 of Book 5, the book says we want to exchange 25m pounds for 50m
dollars. So I guess we will pay 25m pounds and get 50m dollars. The common
sense told me that we'll also receive the interest on the dollars (because
dollar is what we received) and pay the interest on the pounds (because
pound is what we paid). But the book then says exactly the opposite.
How am I wrong? | c******s
发帖数: 58 | 2 SWAP is technically just a package of two bonds.
In your example, you BORROW 50m USD from counterparty and LEND 25m GBP to
him at the same time. During the life of the SWAP, you RECEIVE the interest
on the GBP and pay the interest on USD. At the end of SWAP term, you
exchange the notional amount back, just as paying/receiving bond princeples. | L***z
发帖数: 454 | 3 Well, that makes swap easier to understand. Thanks a lot! | L***z
发帖数: 454 | 4 Well, that makes swap easier to understand. Thanks a lot! |
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