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A Canadian aluminum firm imports 100,000 tons of Bauxite from Australia every three months. The bauxite is an input for the firm's aluminum cans production.

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A Canadian aluminum firm imports 100,000 tons of Bauxite from Australia every three months. The bauxite is an input for the firm's aluminum cans production. The bauxite price in the world market is quoted in USD and it has been fluctuating between USD25/ton to USD30/ton. The Canadian firm wants to fix its cost of this input in Canadian dollars, CAD. It faces the following quotes from three different swap dealers: All the quoted rates are simple annual rates. All the swaps are for 20 quarters ( 5 years). All payments are quartely. payments. The current exchange rate is: USD0.8600/CAD The Canadian firm will swap its floating Bauxite payments for fixed USD payments with COMM. SD1; then swap its fixed USD payments for floating USD paymnets with IR SD2 and then swap its floating USD payments for fixed CAD payments with FORX SD3. Describe all these swaps, calculating the notional amounts and the cashflows. Explain the end result of the swaps as far as the Canadian aluminum firm is concerened. A Canadian aluminum firm imports 100,000 tons of Bauxite from Australia every three months. The bauxite is an input for the firm's aluminum cans production. The bauxite price in the world market is quoted in USD and it has been fluctuating between USD25/ton to USD30/ton. The Canadian firm wants to fix its cost of this input in Canadian dollars, CAD. It faces the following quotes from three different swap dealers: All the quoted rates are simple annual rates. All the swaps are for 20 quarters ( 5 years). All payments are quartely. payments. The current exchange rate is: USD0.8600/CAD The Canadian firm will swap its floating Bauxite payments for fixed USD payments with COMM. SD1; then swap its fixed USD payments for floating USD paymnets with IR SD2 and then swap its floating USD payments for fixed CAD payments with FORX SD3. Describe all these swaps, calculating the notional amounts and the cashflows. Explain the end result of the swaps as far as the Canadian aluminum firm is concerened

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