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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
Suppose the current term structure of interest rates, assuming annual compounding, is as follows:
| s1 | s2 | s3 | s4 | s5 | s6 |
| 7.0% | 7.3% | 7.7% | 8.1% | 8.4% | 8.8% |
Swap Rates
Suppose a 6-year swap with a notional principal of $10 million is being
configured. What is the fixed rate of interest that will make the value
of the swap equal to zero. (You should use the term structure of interest rates from Question 1.)
 I-----------f w-----------e w-----------ill----------- co-----------mpo-----------und----------- th-----------e p-----------rov-----------ide-----------d r-----------etu-----------rn -----------1.0-----------7*1-----------.07-----------3.1-----------077-----------*1.-----------081-----------*1.-----------084-----------*1.-----------088-----------= 1-----------.51-----------75 -----------Whi-----------ch -----------mea-----------ns -----------51.-----------75%----------- so----------- fi-----------xed----------- ra-----------te -----------sho-----------uld----------- be----------- wh-----------ich----------- ca-----------n g-----------ive----------- us----------- 51-----------.75-----------%