Swap Contracts | Introduction to Derivatives (Part 6 of 6)
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- Опубликовано: 30 июн 2024
- Introduction to Derivatives - FREE | Corporate Finance Institute®
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This introductory course on the topic of derivatives covers the fundamental knowledge you need to know about derivatives. You will learn to differentiate between forward, futures, options, and swaps contracts. You will also work on practical examples in Excel to calculate the profits/losses for each type of contracts. By the end of this course, you will have the essential knowledge about derivative contracts required to proceed to more advanced topics, such as derivatives pricing and trading.
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The course was amazing! Great clarity and concise!
Well done! Very clear and concise explanation. I've always wondered what these swaps were all about. Now I know.
Very well explained!
Thank you very much!
Well explained!
Very nice!!
Is the fixed leg rate annually or semi?
how does company A reduce his cost of borrowing? since he prefers floating rate, he can just borrow at Libor instead of entering the swap contract with company B, no? I think in the table company A's floating borrowing cost should be Libor+0.5% and company B's floating borrowing cost should be Libor. That's when the opportunity of swapping starts to show.
company B is at a disadvantage in comparison to A in terms of borrowing cost. Company B knowing how much of an advantage Company A has, decides to invite company A into a deal (swap) by incentivizing company A. Company B instead acts to be the lender of Company A by giving Company A what A originally wants which is Libor PLUS now the incentive of company B which is a fixed rate higher than Company A's fixed cost rate.
The only way for Swaps to work is both parties shre their respective borrowing cost position and options, from there the parties can carefully structure a deal which will be beneficial to both of them with one party (1) getting the same plus incentive; while other party getting the lowest rate he can get and paying for it
I don't know bu this is really like arbitrage
Well explained Anton 👏🏾
@@csanton3946 well explained
You did not go into details. Hard to get.