The following information is for question 2528 Consider a 3-year annual currency swap that takes place between a foreign firm (FF) with FC currency units and a U.S. firm (USF) with $ currency units. USF is the fixedrate payer and FF is the floating-rate payer. The fixed interest rate at the initiation of the swap is 7%, and 8% at the end of the swap. The variable rate is 5% currently; 6% at the end of year 1;8% at the end of year 2; and 7% at the end of year 3 . At the beginning of the swap, $1.0 million is exchanged at an exchange rate of FC2.0=$1.0. At the end of the swap period the exchange rate is FC1.5=$1.0. Note: With this currency swap, end-of-period payments are based on beginning-ofperiod interest rates. At the end of year 2: A. USF pays FC140,000;FF pays $60,000. B. USF pays FC60,000; FF pays $70,000. C. USF pays USD 70,000;FF pays FC60,000. The following information is for question 2528 Consider a 3-year annual currency swap that takes place between a foreign firm (FF) with FC currency units and a U.S. firm (USF) with $ currency units. USF is the fixedrate payer and FF is the floating-rate payer. The fixed interest rate at the initiation of the swap is 7%, and 8% at the end of the swap. The variable rate is 5% currently; 6% at the end of year 1;8% at the end of year 2; and 7% at the end of year 3 . At the beginning of the swap, $1.0 million is exchanged at an exchange rate of FC2.0=$1.0. At the end of the swap period the exchange rate is FC1.5=$1.0. Note: With this currency swap, end-of-period payments are based on beginning-ofperiod interest rates. At the end of year 2: A. USF pays FC140,000;FF pays $60,000. B. USF pays FC60,000; FF pays $70,000. C. USF pays USD 70,000;FF pays FC60,000