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A compary based in the United Kingdom has an itatian subisidiary. The subsidiary generates C25,000,000 a year, received in equivilent semlannual installments of 612,500,000. The

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A compary based in the United Kingdom has an itatian subisidiary. The subsidiary generates C25,000,000 a year, received in equivilent semlannual installments of 612,500,000. The British company wishes to conveit the euro cash flows to pounds twice a year. It plans to engage in a currency swap in order to lock in the exchange rate at which it can comvert the euros to pounds. The current exchange rate is 61.8 . The foxed rate on a ploin vanilla currency swap in pounds is 7.9 percent per yeor, and the fixed rate on a plain vanilla curtency swap in euros is 6,9 percent per yea. 6. Determine the notional principals in euros and pounds for a swap with semlannual payments that will help achieve the objective. b. Determine the semlannual cash flows from this swop

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