With the irs syarikat a has effectively turned its

reduced returns to its clients.
- KLMB can enter a 3-year IRS of RM50 million notional principal as the floating rate
payer to maintain steady returns in the face of falling ST rates.
- In the swap, KLMB essentially passes through its earnings from 3-month paper to the
counterparty as the 3-month KLIBOR.
- It receives in exchange a fixed rate of X%.
- As a result, KLMB can be assured of providing its clients with a return approximating X
% even though ST rates are falling.
8. 5 variables that determine the option prices under BSOPM
Stock / Underlying
Asset Price
- The change in stock / underlying asset price is positively correlated
to call values & negatively to puts.
- This relationship between underlying asset price & option values
are known as deltas.
Exercise Price - The ~ has a negative correlation with call options & a positive one
with put options.
- Raising the ~ benefits put options but works against calls.