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Any derivative contacts value at initiation is 0 either it is swap, forward, future etc.. neither long nor short will be at advantage during the contact initiation because arbitrage neutralizes the advantage. Later one party may gain and other may loose because of change in market rates (Libor...

Can anybody tell me.. is there any sectional cutoff for FRM part 2 ? i.e. getting 4 in any section leads to failure ?

At the initiation of swap. fixed leg is equal to floating leg and net value of swap is zero. Question asked was to calculate the floating leg. So, it will be = 6 (fixed swap payment)/ (1+ 1 year OIS rate) + 6+100 (fixed swap payment + notional)/(1+ 2 year OIS rate)^2 . answer i remember is...

i was stumbled.. whether to consider BB- as investment grade or non investment grade when answering the risky loans question (X,Y,Z).. i used the formula Expected loss = (1-RR) * PD* Exposure and arranged the loans with respect to their Expected loss values.. did any one solve that question?

CDS Value means value of the derivative while spread is the premium that is being charged from buyer. Why would any investor/buyer buy a cds when correlation is enough to tackle the issue at hand ? hence when correlatoion -> 1, then cds spread -> 0

I marked the answers as MBS and checking deposits