An oil buyer and seller enter into a financially settled 1 year swap. The spot price is $86.20 and the swap price is $90.00. How much will the oil seller receive as the swap payment?

Question

Quizplus · Accepted Answer

The swap payment is the difference between the spot price and the swap price, multiplied by the notional amount. In this case, the notional amount is not given, so we cannot calculate the exact amount of the swap payment. However, we can see that the swap price is higher than the spot price, so the oil seller will receive a positive swap payment. The correct answer is therefore B) $3.80.

An Oil Buyer and Seller Enter into a Financially Settled