Question
In a swap agreement, a financial institution pays 8% in EUR and receives 6% in USD. The principals in the two currencies are 12 million
In a swap agreement, a financial institution pays 8% in EUR and receives 6% in USD. The principals in the two currencies are 12 million USD and 10 million EUR. Payments are exchanged every year, with one exchange having just taken place. The swap will last two more years. For all maturities, the USD interest rate is 6%CC and the EUR rate is 7%CC. The current value of the EUR is 1.05 USD. What is the value of the swap to the financial institution?
A. $1.825M
B. $1.318M
C. $1.825M
D. $2.012M
E. $2.658M
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Financial Accounting For Executives And MBAs
Authors: Wallace, Simko, Ferris
4th Edition
1618531980, 9781618531988
