An Example of a“ Plain vanle”63 Interest Rate Swap An agreement by Microsoft to receive 6-month LiBOr pay a fixed rate of 5% per annum every 6 months for 3 years on a notional principal of $100 million Next slide illustrates cash flows Options, Futures, and other Derivatives, 5th edition 2002 by John C. HullOptions, Futures, and Other Derivatives, 5th edition © 2002 by John C. Hull 6.3 An Example of a “Plain Vanilla” Interest Rate Swap • An agreement by Microsoft to receive 6-month LIBOR & pay a fixed rate of 5% per annum every 6 months for 3 years on a notional principal of $100 million • Next slide illustrates cash flows