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**Mumeseest** · 07-10-2012, 03:54 AM

Do you mean to say that if you lend me 100 bucks and I pay you back, then lend you 100 bucks and you pay me back, 400 dollars worth of contracts were not exercised?

No. On the derivatives I mean if we trade a swap on $10m notional, 5% Vs float and the net difference until termination is $50,000, then the contract is 'worth' $50,000, not $10m and not even 5% of $10m over 2 years.

On the debt, I mean if I lend you $100, and you lend $90 of that to a friend and he lends $50 of that to another friend, the principle outstanding (and thus the debt) is still $100, not $240.

07-10-2012, 03:54 AM	#59
Mumeseest Join Date Oct 2005 Posts 364 Senior Member	Do you mean to say that if you lend me 100 bucks and I pay you back, then lend you 100 bucks and you pay me back, 400 dollars worth of contracts were not exercised? No. On the derivatives I mean if we trade a swap on $10m notional, 5% Vs float and the net difference until termination is $50,000, then the contract is 'worth' $50,000, not $10m and not even 5% of $10m over 2 years. On the debt, I mean if I lend you $100, and you lend $90 of that to a friend and he lends $50 of that to another friend, the principle outstanding (and thus the debt) is still $100, not $240.
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