Describe the financial effects of the swap

Assignment Help Finance Basics

Reference no: EM131993427

Question: In March 2011, we entered into an interest rate swap that expires on March 1, 2016, with a notional amount of $500 million, accounted for as a fair value hedge, that swaps fixed rate interest on our 5.40% Senior Notes due March 1, 2016 for variable interest equal to LIBOR plus 300 basis points. At January 29, 2012, the approximate fair value of this agreement was an asset of $39 million, which is the estimated amount we would have received to settle the agreement

Describe the financial effects of the swap for Home Depot. At what LIBOR rate does Home Depot benefit from the swap? At what LIBOR rate does Home Depot lose from the swap? Discuss what is meant by a "zero-sum game.

Reference no: EM131993427

Questions Cloud

How do public health and healthcare delivery systems compete : Question - How do public health and healthcare delivery systems complement and compete with each other

Define the communication style in your relationship : How would you define the communication style in your relationship with your parents? Your siblings? Your friends? Your significant other?

How to reduce capital requirements and administrative chores : Because she felt that opportunities for further advancement at the hospital were limited, she decided that she would open an independent laboratory to provide.

What percent can sales grow before new fixed assets : what percent can sales grow before new Fixed Assets are required? what is the Sustainable Growth Rate?

Describe the financial effects of the swap : Describe the financial effects of the swap for Home Depot. At what LIBOR rate does Home Depot benefit from the swap? At what LIBOR rate does Home Depot

About the payment under the different time assumptions : What do you notice about the payment under the different time assumptions?

Post the transactions to the t-accounts in given case : Post the above transactions to the below T-accounts. Assume that the opening balances in each of the accounts is zero except for cash, accounts receivable.

The difference in the present value of bond : The difference in the present value of bond A and bond B is $178.3265. If both bonds are priced using the same yield r. Calculate r.

Best strategy when you experience success after one year : What is your best strategy when you experience success after one year: Do you expand, continue operations without expansion, or abandon the project?

User Account

All Pages