finance-Suppose your trades are all for a notional amount of $100,000
QUESTION
1.) Suppose your trades are all for a notional amount of $100,000 and your counterparty delivers a day late once every fifty trades. At an annual interest rate of 5%, how much money does this save you if you make 1,000 trades per year? 50,000 trades per year(about 200 trades/day)?2.) Your counterparty goes bankrupt. Assume half your trades were sells and settlement happens on a T+3 horizon. How much money is now at risk for 1,000 and 50,000 trades per year?
ANSWER:
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