Interest rate swap by CA Nagendra

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CA-Final

SFM/MAFA

Fee: Rs. 6,000/-

BY: CA Nagendra

[B.SC. (H), CA, highest mark scorer in SFM-CA Final]

-Wide range of questions collection

-Full coverage, including “OTC Derivative Chapter” which is not covered by anyone till the date

-Double Benefit to ICWA-Final Student: Out of total 160 marks, CA final class will cover 120 marks (60 marks Capital Market and 60 marks FM) and remaining 40 marks of FM will cover by IPCC class. No extra payment for IPCC class

Institute of Quality Studies

D-223/1, 1^st Floor, Near Metro Station (Above Deutsche Bank ATM),

Laxmi Nagar, Delhi-92

H-44, 1^st Floor, (Near State Bank of Hyderabad), Laxmi Nagar, Delhi-92

Mob: 9811465474, 9718057916, 9910865804

Wonderful...................

Thanks for sharing.

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Superb notes.

and Best teachers for SFM

thank a lot rahul.. ive been waiting for this topic notes since long.. thanx again

Originally posted by : harpreet singh
	thank a lot rahul.. ive been waiting for this topic notes since long.. thanx again

most welcome

rahulji,

i had one query in hedging stratergies with swaps ( for Interest Rate swap) in top page of 5.11 of nagendra sir's note

Nature                           Risks                                    Hedginig action

Assets ( ie Deposit)        

Fixed rate                       Rising Interest rate                 swap from fixed to floating

Liabilities( Ie borrowing)

Fixed Rate                     Falling interest rate              swap from fixed to floating

MY QUERY: Assets 1) if in case of Depoist ( assets) if the rate of interest is fixed then why should i have risk of interest rate rising,infact i should be at risk if the interest rate is falling 

Liabilities 2) Nature Fixed rate: If the interest  rate is falling then i should be benefited,but why should i have risk of rate falling 

Sir due to unclarity of the above topic ,i am not able to solve the given 4 examples 

Kindly help

Pranam

Answer: Q-1: Basically, On deposite, we earn interest. If interest rate is rising in floating market, you are not able to realise benefit from that rising floating rate because your interest rate is fixed. So your intention is to earn benefit from that rising interest rate (i.e. receive higer interest rate) and it is possible when you are earning floating income. basically it is risk of opportunity loss which one can earn by convering fixed income into flaoting income.

I think you can link same concept in second query also.

Thank you very much sir,i was little bit confused as the word " Risk" was wrronglly interpreted by me , as your rightly said it is 'Risk of Opportunity cost", my doubts are cleared for the same.

Thank you again sir...

Pranam

pls upload capital budegeting notes tooo