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12:50
  • 2 days ago
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00:00So let's discuss the example for interest rate caps.
00:06A company has borrowed 1000 lakhs on floating basis. Floating basis 3 years.
00:13The interest rates are reset every year.
00:18The spread over Libar is 25 basis points. Libar plus 25 basis points.
00:32Call percentage. 10 percentage 10.25 percentage will be taken.
00:38The company buys 3 year cap on a 1 year Libar with a strike rate of 9 percentage.
00:46Libar one of the 9 percentage will be managed.
00:49If you want to make a strike rate, strike rate.
00:569 percentage. Cap.
01:00Right. Having the same face value of it is 1000 lakhs.
01:05The cap carries a premium of 2 percentage of the face value or 20 lakhs.
01:11The premium is 2 percentage.
01:15Or 20 lakhs.
01:171000 lakhs to be 2 percentage of the face value is 20 lakhs.
01:20That's why you mean it is 20 lakhs.
01:212 percentage on the value.
01:23That's simply 20 lakhs.
01:25Current 1 year Libar rate is 9 percentage.
01:291st year Sine.
01:309 percentage.
01:311st year 2nd year 3rd year 3rd year 9.5.
01:332nd year 8.5.
01:343rd year 10 percentage.
01:35What is the cash flow from cap each year?
01:36Oh, cash flow from cap each year.
01:37Oh, cash flow is 8.5.
01:382nd year 8.5.
01:393rd year 10 percentage.
01:40What is the cash flow from cap each year?
01:41Oh, cash flow is 8.5.
01:42So, year year 1, year 2, year 3.
01:54Libar rate is 9.5 percentage.
01:59Here is 8.5 percentage.
02:01Here is 10 percentage.
02:04Okay.
02:05Cash inflow from, cash inflow from caps.
02:10Caps inflow.
02:11Epa over?
02:12Strike rate on the 9 percentage.
02:14So, if it is more than 9 percentage, we will get.
02:19So, 1st scenario, 0.5 percentage.
02:220.5 percentage.
02:25Apa 1000 lakhs irkku 0.5 percentage puttikna 5 lakhs will be inflow of cash.
02:362nd year 8.5.
02:38Strike rate akkur liuk kambi airukku we don't get anything.
02:403rd year 10.
02:42Strike rate anna 9 ikku meela 1 percentage irukkabin chun akkur.
02:461 percentage on the face value 1000 lakhs puttikna avada varudhu 10 lakhs vorum.
02:53Here is caps nal vandu cash inflow.
02:55Caps nal vandu cash inflow.
02:56Caps nal vandu cash inflow.
02:58Caps nal vandu cash inflow.
02:59Okay.
03:00Cap nal vandu cash inflow in percentage in amount.
03:05Right.
03:09Here is cash inflow.
03:11Cap premium cuttikna engel liya.
03:14That is the cash outflow then.
03:1920 lakhs is the outflow.
03:2220 lakhs is the outflow for 3 years. You can amortize over the 3 years period to go to club.
03:26Year on year, 6.67 lakhs, 6.66 lakhs, 6.66 lakhs, this is the outflow for interest.
03:42Cash outflow for interest. Interest with outflow? Are you interested?
03:48Interest rate, Libar rate, basis points cut in 0.25.
03:52JASI, 9.75% you cut.
03:56First year. Second year, 8.5.25% you cut.
04:0610.25% you cut.
04:10Cash outflow in terms of rupees, interest outflow.
04:16Interest outflow. Interest outflow. Interest outflow.
04:20Percentage, this is rupees.
04:241,000 to 9.75% you cut.
04:3097.5 for the first case.
04:32Lakhs.
04:34This is 87.5 lakhs.
04:38This is 102.5 lakhs.
04:42Now, my question is, what is the cash outflow year on year?
04:48First year, 97.5 outflow plus 6.67 outflow, give inflow.
04:56Now, we have to subtract outflow.
04:5897.5 plus premium outflow.
05:02That is actually the first year.
05:04Year on year, we have to assume that.
05:06So, 97.5 outflow, 6.67 outflow.
05:12This is inflow.
05:145 subtracting, the ultimate value being.
05:1699.17 lakhs.
05:20Second year, 87.5, 6.67.
05:22One percent inflow,
05:2494.17 is the outflow.
05:28That is the answer.
05:30That is the answer.
05:32102.5 plus 6.66 minus 10.5.
05:3610 lakhs.
05:3899.17.
05:40So, this is the answer.
05:42Rate of interest,
05:44100% or 20%
05:46We have to go to 99.17.
05:48We have to go to 99.17.
05:50We have to go to 99.17.
05:52So, this is the answer.
05:54Outflow is the answer.
05:56Okay.
05:58How much is that?
06:00Yeah, last one.
06:02Loan or repayment.
06:04You got to stop.
06:06This is the logic of caps.
06:10This is the logic of caps.
06:12Come on, make a note of it.
06:26You've got to do something.
06:28Well, I talked over and terminate the supray.
06:32Googleurs are awesome.
06:34You shut up.

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