Solution-Describe difference between direct and

Describe difference between direct and intermediated swap

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Question - XYZ Resource Pty Ltd recently issued $10 million in floating rate notes in order to fund an infrastructure project. The notes pay an annual coupon of BBSW plus 100 basis points. The company approaches Bendigo Bank to establish an intermediated vanilla swap. The swap contract sets a fixed rate of 7.00 per cent per annum and a reference rate of the 12-month BBSW.

a) Describe the difference between direct and an intermediated swap?

b) At the first interest payment date, the BBSW is 7.50 per cent per annum. Determine which parties to the swap contract are required to make the first payment and why?

Reference no: EM133183087

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Describe difference between direct and intermediated swap

Reference no: EM133183087

Reference no: EM133183087

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