Calculate the net payments involved

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Reference no: EM131457888

Question: Calculate the net payments involved and indicate who pays what in this swap deal if the bbalibor takes on the values 7.00 percent, 6.50 percent, 7.00 percent, 7.50 percent, and 6.00 percent at the end of the first, second, third, fourth, and fifth year, respectively.

• The automakers eater into a swap with a three-year term on a principal of $200 million.

• The spot exchange rate 0 per pound. Amerkana raises 100 X 2 = $2.00 million and gives it to Britannia, which in turn raius £100 million and ON.. it to Americana.

• Arnericana pays Britannia 9percent per year on £1.00 million and Britan¬nia pa, Americana 6 percent per ye. on 5.200 million. the end death

Now assume that the companies make payments every six months: the swap ends after six semiannual payments, and the principals are handed back after three years.

Reference no: EM131457888

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