38. Davis In. is a U.S. company with a 22.75 million Thai baht payable due in six months. The company has negotiated a non-deliverable forward contract with its bank. The reference rate is the baht's closing exchange rate in USD quoted by Thailand's central bank in 180 days. The spot rate for the baht at origination is $.0324. If the spot rate quote on the settlement date is $.0286, the company will a. pay $86,450 b. be paid $86,450 c. pay $8,645 d. be paid $8,645 e. none of these 39. What is the USD cost of a money market hedge on 350,000 GBP payables due in 90 days if the spot rate of the pound is $1.82 and the 90-day forward rate is $1.78? The 3 month rate is 4.4% in the UK and 2.4% in the U.S. a. $618,069 b. $622,070 c. $623,490 d. $624,797 e. none of these 40. A fixed-for-floating currency swap agreement is made between two exporters. Exporter A agrees to pay 1.5% APR on Japanese Yen principal of W1,836,000,000. Exporter B agrees to pay six month Libor on US dollar principal of $18,000,000. The payment schedule is every six months for a term of 3 years. If 14 Libor has increased to 6.25% at the end of the first period, what is the net cash flow in USD assuming an exchange rate of USDN102. a. $135,000 to A b. $562,500 to A c. $270,000 to A d. $1,125,000 to B e. $427,500 to A 41. A two year equity swap with semi-annual payments and a notional principal amount of $14.25 million is created Importer A makes a floating payment based on 14 Libor + 36 basis points & Importer B makes a fixed payment based on the Dow. If the Dow rises 5,85% and 14 Libor is 4.59% at the end of the first period, what is the net cash flow? a. $455,288 to A b. $833,625 to A c. $352,638 to B d. $128,250 to B e $179,550 to A