Find the Approximate Upcoming Net Payment on an Equity Swap

question 7

Multiple Choice

Find the approximate upcoming net payment on an equity swap in which party A pays the return on stock index 1 and party B pays the return on stock index 2.The notional principal is $25 million.Stock index 1 starts the period at 1500 and goes up to 1600 at the end of the period.Stock index 2 starts the period at 3500 and goes up to 3300 at the end of the period.

• A)The party paying index 1 pays about $238,000
• B)The party paying index 2 pays about $238,000
• C)The party paying index 2 pays about $3.095 million
• D)The party paying index 1 pays about $25 million
• E)The party paying index 1 pays about $3.095 million

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Definitions:

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Graafian Follicle

A mature ovarian follicle that releases an egg during ovulation.