Roflnadal

level3aspirant Wrote:
-------------------------------------------------------
> i feel there something missing out here ... JMI
> has a 'pay floating' obligation in first place.
>
> to hedge, he must take the 'receive floating, pay
> fixed' side. there's no info on any receive
> floating leg of transaction. ???


They have a floating obligation from the leverage floater. to fully hedge they purchase a swap but the fixed leg needs to be hedged as well with a fixed bond purchase.

Not very well worded question really.