1. An investor owns Euro10M 3-year 4% bond. The investor wants to convert the bond to $ exposure. The current 3-year Euro to $ swap rate is 3.5% Euro versus $ Libor. The current $/E FX rate is $1.10. What is the net $ exposure?

2. What would happen to the investor if the swap counterparty fails at maturity, there is no collateral, and the $/E FX rate moves to $1.05?

3. A company borrows $220M for 5-years at 3%, but wants a Euro liability since its revenue comes mostly from Germany. The exchange rate is $1.10. The current 5-year swap rate is $3.2% versus E3.1%. What is the net result for the company?

4. What would happen to the company if the swap counterparty fails at maturity, there is no collateral and the $/E FX rate moves to $1.15?

1. An investor owns Euro10M 3-year 4% bond. The investor wants to convert the bond to $ exposure. The current 3-year Euro to $ swap rate is 3.5% Euro versus $ Libor. The current $/E FX rate is $1.10. What is the net $ exposure?

2. What would happen to the investor if the swap counterparty fails at maturity, there is no collateral, and the $/E FX rate moves to $1.05?

3. A company borrows $220M for 5-years at 3%, but wants a Euro liability since its revenue comes mostly from Germany. The exchange rate is $1.10. The current 5-year swap rate is $3.2% versus E3.1%. What is the net result for the company?

4. What would happen to the company if the swap counterparty fails at maturity, there is no collateral and the $/E FX rate moves to $1.15