Interest rates of all maturities are 5 percent with continuous compounding in the U.S. and 10 percent with continuous compounding in the UK. Assume that rates have remained unchanged for the last year. The current exchange rate is 1.5000. Consider a company that has entered into a swap where it will receive a fixed rate of 4 percent in US dollar on a principal of $15 million, and pay LIBOR in pounds on a principal of 10 million British pounds. Payment are annual. The swap has a remaining life of 18 months.

a)Calculate the value in US dollars of the payments that will be received in US dollars.

b)Calculate the value in British pounds of the payments that will be made.

c)What is the value of the swap?

d)Part of a bank's bid-offer spread in the swap market is compensation for credit risk. Explain why the credit risk component of the bid-offer spread is usually higher for currency swaps than for interest rate swaps.

Please answer the following questions with steps and in detail. Thanks!