Derivatives mock exam question.

[300hoursoverand]

Can someone explain why we subtract 0.9696 from the other DFs before determining equity swap?

 

[Gumball1901]

That is the new Z4 value. Would like some help on this as well. Sometimes it seems like you subtract Z4 others add Z4.

 

[Gumball1901]

From my underanding the Z4 changes the last $1 notational principal to PV?

 

[300hoursoverand]

Gumball1901 wrote:
From my underanding the Z4 changes the last $1 notational principal to PV?

I dont get why they subtract that value. In the curriculum they dont do that. I hope it isnt some equation error of some sort

 

[Batman1]

It’s part of the fixed payment.

 

[300hoursoverand]

Batman1 wrote:
It’s part of the fixed payment.

Could u explain that value?

 

[300hoursoverand]

Never mind, I think I got it.
That value was based on the 90day LIBOR.
i was trying to use the 60 period.
Sorry for the confusion guys.