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2#
发表于 2011-7-11 20:10
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Buyer is buying the interest rate floor from the seller.
1) Seller sells the floor to the buyer for a premium
2) Interest falls lower than the floor, Buyer says to Seller, "hey you owe me the difference, cough it up."
3) Seller goes "wuh? You crazy, Do I know you?"
Buyer: "Dude, interest rate lower than the floor I bought from you, pay up <expletive>"
Seller: "Ohh~~ that's riigghht. Okok, let me go home and get it.. Wait here kk?" <changes cell phone and bolts town)
4) Buyer po'd that he got screwed the premium he paid for the floor.
5) Hence, "seller is not exposed to counterparty risk"
Edited 1 time(s). Last edit at Thursday, May 20, 2010 at 09:40PM by joseph213. |
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