A currency swap can be viewed as a long-term forward contract. Consider a 10-year currency swap contract that a company,ABC, has signed with HSBC. The notional principals are 100 million for pounds and 10 billion for yens. At the inception date of the swap, the spot exchange rate is 100 /, and ABC receives the notional principal in pounds from and pays the notional principal in yens to HSBC. Every year thereafter but prior to maturity, the swap agreement calls for ABC to pay to HSBC (at 6.7% p.a. of the notional principal in pounds) and in return, to receive from HSBC (at 7.0% p.a. of the notional principal in yens). At maturity date, the counterparties exchange both the last interest payments and the notional principals. 1) The effective forward exchange rate between the counterparties during each year prior to maturity, when measured in /, is equal to ____________________. Answer: 2) The effective forward exchange rate between the counterparties at the maturity date, when measured in /, is equal to ____________________. Answer: 3) Viewing this swap in isolation over the duration of the contract, ABC will be hurt by a yen ________________ relative to the pound. Answer: