Question
Green Shoes Cobbs Inc. receives annual GBP payments of 6% on a notional of GBP 15,000 Green Shoes Cobbs Inc. pays annual USD payments of
Green Shoes Cobbs Inc. receives annual GBP payments of 6% on a notional of GBP 15,000 Green Shoes Cobbs Inc. pays annual USD payments of 7% on a notional of USD 22,500. Assume that the USD and GBP interest rates are rUSD = 4% and rGBP = 6%. The swap currently has 4 years until it matures. The next cash flow exchange will occur one year from today. If the current USD/GBP spot rate XNUSD/GBP = 1.65 what is the value of this currency swap for Green Shoes Cobbs Inc.?
- Negative USD 200.18
- Negative USD 7,850.96
- Positive USD 7,850.96
- Positive USD 200.18
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Fundamentals Of Financial Management
Authors: James Van Horne, John Wachowicz
13th Revised Edition
978-0273713630, 273713639
