What is the amount of the payment

Reference no: EM131426523

Burlingame Bank and the ABC Manufacturing Corp. enter into the following 7-year swap with a notional amount of $75 million and the following terms: Every year for the next seven years, Burlingame Bank agrees to pay ABC Manufacturing 7% per year and receive from ABC Manufacturing LIBOR.

a. What type of swap is this?

b. In the first year payments are to be exchanged, suppose that LIBOR is 4%. What is the amount of the payment that the two parties must make to each other?

Reference no: EM131426523

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