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Find the Approximate Upcoming Net Payment on an Equity Swap

Question 4

Multiple Choice

Find the approximate upcoming net payment on an equity swap in which party A pays the return on stock index 1 and party B pays the return on stock index 2.The notional amount is $25 million.Stock index 1 starts the period at 1500 and goes up to 1600 at the end of the period.Stock index 2 starts the period at 3500 and goes up to 3300 at the end of the period.


A) The party paying index 1 pays about $238,000
B) The party paying index 2 pays about $238,000
C) The party paying index 2 pays about $3.095 million
D) The party paying index 1 pays about $25 million
E) The party paying index 1 pays about $3.095 million

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