Question

How do you understand the value for agreement? Let's say I have 100 as the value for my agreement. Is this acceptable?

Answer 1

Answer:

Agreement value refers to the current market value of swap. It is the understanding of how expensive it is to do same kind of swap under present market conditions . It is based on the cost or benefit of the swap at present market rates rather than the market value when actually the swap has to happen.

The agreement values are determined for early termination purpose for a swap calculated in present interest rates.

• If we say we have 100/- as the value of agreement that means the present market value of exact same kind of swap is 100/-