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Mr. Anas, a bond trader, has just completed his assessment of interest rate outlook. He...

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Accounting

Mr. Anas, a bond trader, has just completed his assessment of interest rate outlook. He is convinced that rates are likely to rise steadily over the next two years. To take advantage of this likely rise, Mr. Anas intends to enter into interest rate swaps.

(i) Assess the position that he should take to benefit from the rising interest rates. (4 marks)

(ii) In contrast, assess the position that he should take if the interest rates are expected to fall. (3 marks)

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