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Template:M intro isda Party A and Party B: Difference between revisions
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Template:M intro isda Party A and Party B (view source)
Revision as of 16:25, 2 December 2023
, 2 December 2023no edit summary
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| Line 60: | Line 60: | ||
:Sold: - | :Sold: - | ||
:Borrowed: USD10m | :Borrowed: USD10m | ||
:Amount owed: | :Amount owed: Floating Rate USD 10m | ||
:Bought 10m of Cryptöagle | :Bought 10m of Cryptöagle | ||
:Amount due: [[total return swap|total return]] on 10m Lexrifyly and 10m Cryptöagle}}}} | :Amount due: [[total return swap|total return]] on 10m Lexrifyly and 10m Cryptöagle}}}} | ||
Note the cashflows in the loan scenario: Pay | Note the cashflows in the loan scenario: Pay Floating Rate on 10m, receive total return on Cryptöagle. These are the same cashflows you would expect under a delta-one equity derivative on [[Cryptöagle]]. Like a loan, an equity swap allows a customer to create a new exposure to [[Cryptöagle]] while not giving up its existing portfolio of exposures, which it would have to do if it were to buy Cryptöagle outright. | ||
were it t by paying you a rate I am deploying my capital assets to gain access to a new capital asset, without having to get rid of the old one. Me paying a fixed rate implies I have a corresponding asset which will finance my swap payments. I am able to hold on to that and get synthetic exposure to a new asset paying say a floating rate, because my dealer has funded that asset for me. | were it t by paying you a rate I am deploying my capital assets to gain access to a new capital asset, without having to get rid of the old one. Me paying a fixed rate implies I have a corresponding asset which will finance my swap payments. I am able to hold on to that and get synthetic exposure to a new asset paying say a floating rate, because my dealer has funded that asset for me. | ||