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Please Help, Urgent. Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss Franc and pay U.S. dollar annually, on a notional amount
Please Help, Urgent.
Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss Franc and pay U.S. dollar annually, on a notional amount of \\( \\$ 2,000,000 \\). The spot exchange rate at the time of the swap is SF0.8/ \\( \\$ \\). Assume that one year into the swap agreement Carlton decides it wishes to unwind the swap agreement and settle it in dollars. Assuming that a two-year fixed rate of interest on the Swiss Franc is now 2.59\\%, and a two-year fixed rate of interest on the dollar is now 5.90\\%, and the spot rate of exchange is now SF0.0.891/\\$. To Carlton, what is the net present value (in dollar) of the swap agreement? (Keep the sign and two decimal places.)Step by Step Solution
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