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need ASAP! please solve showing formulas/explanation. will upvote once answered thank you in advance MVP! (4) Firm IBM is in a newly-initiated one-year swap where
need ASAP! please solve showing formulas/explanation. will upvote once answered thank you in advance MVP!
(4) Firm IBM is in a newly-initiated one-year swap where at the end of the year it pays 10% year in sterling and receives 8% year in dollar, plus the exchange or principle at the beginning and end of the year. The principal amounts in the two currencies are $15 million and 10 million pounds. The current exchange rate S$1.5 per pound. The one-year simple interest rates are 5% for US and 8% for UK. (a) What is the value of the swap to IBM? (b) Can you change the principal amounts to make this swap have an initial value zero Step by Step Solution
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