Economics

  Q3. Please show the net present value calculation for the following plain vanilla interest rate swap. Interest rate swap: Pay Leg Receive Leg Notional CAD 100 million CAD 100 million Effective Date 10/01/2021 10/01/2021 Maturity Date 10/01/2022 10/01/2022 Coupon 2% 3-month CDOR flat Pay frequency Semi-Annual Semi-Annual* *CDOR coupons are not compounded. Rates: Pay Date CDOR Float Discount Factor 01/01/2022 0.64 0.98 04/01/2022 0.68 0.96 07/01/2022 0.70 0.94 10/01/2022 0.76 0.92 Please fill in the cash flow and PV for both legs. Pay Date Pay Fixed Leg Cash Flow Pay Fixed Leg PV Receive Floating Leg Cash Flow Receive Floating Leg PV Net PV 04/01/2022 10/01/2022 Net PV of Swap   Q4. There is a requirement for funding a project with a 20-year term. If the only two choices are: Choice a) - issue a bond at 2.4% maturing in 20 years, OR Choice b) - issue short-term debt at 1% maturing in 2 years with the intention of repeatedly rolling the debt to another 2-year term until the end of the 20 years. Comment on the difference in the duration`sdt of the two choices and identify two risks that should be considered when selecting either a) or b).