Question 1:

A U.S. company needs to raise 50,000,000. It plans to raise this money by issuing dollar-nominated bonds and using a currency swap to convert the dollars to euros. The company expects interest rates in both the United States and the eurozone to fall.

(Please explain : What is your opinion about the swap transaction? What is the interest rate risk between the different lenders and borrower transact deals through a floating or fix rate. What is advantage in fixed-rate market, while others have an in the floating rate market).

Question 2

A corporation enters into a five-year interest rate swap with a swap bank in which it agrees to pay the swap bank a fixed rate of 9.75 percent annually on a notional amount of 15,000,000 and receive LIBOR. As of the second reset date, determine the price of the swap from the corporations viewpoint assuming that the fixed-rate side of the swap has increased to 10.25 percent. (Please show your calculation clearly and explanation).

The table is created for calculation:

Year	Amount to be received @9.75% (in )	NPV factor (discount rate of 10.25%)	NPV (in )
1
2
3
3
	Total PV on second reset date