Interest rate swapsthe 2011 annual report of the home depot, Ask an Expert

Finance

Interest Rate Swaps.

The 2011 annual report of The Home Depot Inc. revealed the following information regarding its derivative securties:

"In March 2011, we entered into an interest rate swap that expires on March 1, 2016, with a notional amount of $500 Million, accounted for as fair value hedge, that swaps fixed rate interest on our 5.40% Senior notes due March 1, 2016 for variable interest equal to LIBOR plus 300 basis points. At January 29, 2012, the approximate fair value of this agreement was an asset of $39 million, which is estimated amount we would have received to settle the agreement."

1.) Financial Effects to Home Depots?

2.) At what LIBOR rate does Home Depot Benefits from Swap? At was LIBOR rate does it lose from Swap?

3.) what is meant by "Zero-Sum Game" ?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92273192

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