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Robert is considering a currency swap to hedge his transaction exposure. The underlying asset will be MXN 3.7M. One year from now, the fixed leg

Robert is considering a currency swap to hedge his transaction exposure. The underlying asset will be MXN 3.7M. One year from now, the fixed leg will pay out using an exchange rate of MXN 19.6 per USD, and the variable leg will pay out using the spot rate at that time.

  1. What would this swap pay off at each possible exchange rate, ignoring cash flows from the MXN debt he is owed?

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