An asset manager wishes to reduce her exposure to small-cap stocks and increase her exposure to fixed-income securities. She seeks to do so using an…

An asset manager wishes to reduce her exposure to small-cap stocks and increase her exposure to fixed-income securities. She seeks to do so using an equity swap. She agrees to pay a dealer the return on a small-cap index and the dealer agrees to pay the manager a fixed rate of 5.5 percent. For each of the scenarios listed below, calculate the overall payment six months later and indicate which party makes the payment. Assume that payments are made semiannually (180 days per period) and there are 360 days in each year. The notional principal is Rs 50,000,000.
a. The value of the small-cap index starts off at 234.10 and six months later is at 238.41.
b. The value of the small-cap index starts off at 234.10 and six months later is at 241.27.