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(Solved): A market maker in the swaps market gives the following quotes on the 6 month MIBOR Suppose I recei ...
A market maker in the swaps market gives the following quotes on the 6 month MIBOR Suppose I receive \( 8 \% \) fixed cash flows on a notional amount, for 5 years. How can I convert this to floating rate cash flows? At what rate?
Expert Answer
To convert your fixed rate cash flows to floating rate cash flows, you can enter into an interest rate swap. In an interest rate swap, two parties agr