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Question based on info below Question content area top Part 1 Ganado's Cross-Currency Swap: SFr for US$.Ganado Corporation entered into a 3-year cross-currency interest rate
Question based on info below
Question content area top Part 1 Ganado's Cross-Currency Swap: SFr for US$.Ganado Corporation entered into a 3-year cross-currency interest rate swap to receive U.S. dollars and pay Swiss francs. Ganado, however, decided to unwind the swap after one year thereby having two years left on the settlement costs of unwinding the swap after one year. Repeat the calculations for unwinding, but assume that the following rates now apply:
Assumptions | Values | Swap Rates | 3-Year Bid (%) | 3-Year Ask (%) | |
Notional principal ($) | 10500000 | Original: US dollar | 5.56 | 5.59 | |
Original spot rate (SFr/$) | 1.5 | Original: Swiss franc | 1.93 | 2.01 | |
New (1-year later) spot (SFr/$) | 1.556 | ||||
New fixed US$ interest (%) | 5.2 | ||||
New fixed Swiss franc interest (%) | 2.5 |
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