QUESTION 13

Suppose that your company is an Australian company. You have just bought a Eurodollar bond, priced on par at USD 100. To minimize currency risk, you have also entered into a fixed-for-fixed currency swap immediately after you bought the Eurodollar bond. With respect to the currency swap, which of the following statements is most likely to be TRUE?

a. There is no money changing hand on the initiation date.

b. You should pay fixed interest in AUD.

c. There is no money changing hand on the maturity date.

d. You should pay fixed interest in USD.