Payer station or a receiver station

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Reference no: EM131787310

A portfolio manager buys a station with a strike rate of 4.5% that entitles the portfolio manager to enter into an interest-rate swap to pay a fixed rate and receive a floating rate. The term of the station is five years.

a. Is this station a payer station or a receiver station? Explain.

b. What does the strike rate of 4.5% mean?

Reference no: EM131787310

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