I have 2 questions that probably are related. Suppose there is an IRS that pays a 2% fixed rate every 6 months and receives the Libor 3 months (but paid every 6 months). The swap starts today (March 5th) so the first payment is on Sept 5th (in 6 months). But the Libor is a 3 months rate in this case so the fixing should be every 3 months, I guess. If that's the case, there are 2 important dates from now and the first payment: the first fixing date (in 3 months time... i.e. June 5th) and the second fixing date which is also payment date on Sept 5th. But I have read that it is convention to have the float rate to be fixed in advance (2 days before the period) and then paid in arrears at the end of the period. But how does it work in my example? The swap starts on March 5th and pays the Libor 3 months in 6 months time. So in 6 months I should have 2 different fixings for the Libor 3 months. But when? One is happening in 3 months time on June 5th but what about the other? Is it done today?
Is there a simple explanation how the stub rate works? How is ot calculated? Is it related to my first doubt about the very first fixing for the Libor 3 months?