and in Column (2) when the quarter ends. The payment will be received at the end of the first quarter (March 31 of year 1) and is $1,012,500. That is the known floating-rate payment as explained earlier. It is the only payment that is known. The information used to com- pute the first payment is in Column (4) which shows the current 3-month LIBOR (4.05%). The payment is shown in the last column, Column (8). Notice that Column (7) numbers the quarters from 1 through 12. Look at the heading for Column (7). It identifies each quarter in terms of the end of the quarter. This is important because we will eventually be     3The Chicago Mercantile Exchange offers pre-packaged series of Eurodollar CD fu- tures contracts that expire on consecutive dates called bundles. Specifically, a bundle is the simultaneous sale or purchase of one of each of a consecutive series of Euro- dollar CD futures contracts. So, rather than construct the same positions with indi- vidual contracts, a series of contracts can be sold or purchased in a single transaction. THEGLOBALMONEYMARKETS     discounting the payments (cash flows). We must take care to understand when each payment is to be exchanged in order to properly discount. So, for the first payment of $1,012,500 it is going to be received at the end of quarter 1. When we refer to the time period for any payment, the refer- ence is to the end of quarter. So, the fifth payment of $1,225,000 would be identified as the payment for period 5, where period 5 means that it will be exchanged at the end of the fifth quarter.   Calculating the Fixed-Rate Payments The swap will specify the frequency of settlement for the fixed-rate pay- ments. The frequency need not be the same as the floating-rate payments. For example, in the 3-year swap we have been using to illustrate the cal- culation of the floating-rate payments, the frequency is quarterly. The fre- quency of the fixed-rate payments could be semiannual rather than quarterly. In our illustration we will assume that the frequency of settlement is quarterly for the fixed-rate payments, the same as with the floating-rate payments. The day count convention is the same as for the floating-rate payment, "actual/360". The equation for determining the dollar amount ofthefixed-ratepaymentfortheperiodis:   no.ofdaysinperiod notionalamount´(swaprate)´----------------------------------------------------- 360     It is the same equation as for determining the floating-rate payment