Suppose the U$.$S$.$ yield curve is flat at $3\%$ and the euro yield curve is flat at $2\%.$ The current

exchange rate is $0\mathrm{.}83$ per dollar.

What will be the swap rate on an agreement to exchange currency over a $5-$year period? The

swap will call for the exchange of $1$ million euros for a given number of dollars in each year

$($hint: consider the exchange of currencies as a portfolio of separated forward contracts and

use the excel solver$)(7$ points$)$