A Japanese company issues a bond with face value of ¥1.2 billion and a coupon rate of 5.25%. It decides to use a swap to convert this bond into a euro-denominated bond. The current exchange rate is ¥120/€. The fixed rate on euro-denominated swaps is 6%, and the fixed rate on yen-denominated swaps is 5%. All payments will be made annually, so there is no adjustment such as Days/360.

A. Describe the terms of the swap and identify the cash flows at the start.

B. Identify all interest cash flows at each interest payment date.

C. Identify all principal cash flows at the maturity of the bond.