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5. Question 5: A 3-year currency swap has a remaining life of 26 months. It involves exchanging interest at 10% on 25 million for interest
5. Question 5: A 3-year currency swap has a remaining life of 26 months. It involves exchanging interest at 10% on 25 million for interest at 8% on $35 million once a year. The term structure of interest rates is currently flat in both the U.S. and the U.K. If the swap were negotiated today, the interest rates exchanged would be $7% and 10%. All rates were quoted with annual compounding. The current exchange rate is $2 = 1. What is the value of the swap (in USD) to the party paying dollars
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