问题如下:
"Borrowing at a Libor floating rate for five years and then swapping floating-rate payments for fixed-rate payments does not guarantee a fixed rate of interest on the borrowings." Explain this statement.
解释:
The spread added to the Libor floating rate is liable to change if the creditworthiness of the borrower changes. This means that the fixed rate calculated using the current spread may not be what applies for all periods.
这题不用也考虑LIBOR变化的可能性吗?要是LIBOR降了,那fixed payment 也会跟着降吧?