Explain How a Firm Wishing to Invest in Floating Rate

question 20

Essay

Explain how a firm wishing to invest in floating rate investments can use a swap to manage its interest rate exposure?

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Definitions:

Comprehensive Income Items

Components of comprehensive income that represent all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Revaluation Surplus

The increase in value of an asset, over its previously recorded cost, reflected in the financial statements.

Share Premium

The amount received by a company over and above the face value of its shares when issuing them.

Prior Period Adjustments

Adjustments made to the financial statements to correct errors or account for omitted transactions from a previous period, not part of current period earnings.