Consider the same 3-year swap. Suppose you are a dealer who is paying the fixed oil price and receiving the floating price. Suppose that you enter into the swap and immediately thereafter all interest...

A swap is financial derivative contract between counter-parties to exchange cash flows at specified
future time and date, as per specified contractual agreement. Swap contract is equivalent to forward
contract’s portfolio, each with a different maturity dates with the same forward price each time. Swap
price is the present values of future expected price, so that price risk is hedged.
Case 1: An increase by 50 basis points in interest rates, then considering the following information:
1st year forward price $20 and interest rate 1.065
2nd year forward price $21 and interest rate 1.07
3rd year...