Product details

An innovative financial services provider is struggling to arrive at a fixed interest (or SWAP) rate needed by its client. The client''s new project would take five years to reach capacity, at which time debt repayments would begin. Hence the client needed to ''lock in'' interest rates for the first 10 years of the project. To arrive at a price, the financial services provider planned to start with the zero coupon rate bond yield curve, testing various points along the curve. (The teaching note for this case consists of a PowerPoint presentation. A Microsoft Excel spreadsheet is also available for use with this case, product ''7A99N034''.)