Determine the initial exchange of cash

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Reference no: EM131533040

Consider a currency swap in which the domestic party pays a fixed rate in the foreign currency, the British pound, and the counterparty pays a fixed rate in US dollars .The notional principals are $50 million and £30 million. The fixed rates are 5.6% in dollars and 6.25 % in pounds. Both sets of payments are made on the basis of 30 days per month and 365 days per year and the payments are made semi annually

A-Determine the initial exchange of cash that occurs at the start of the swap

B-Determine the semi annual payments

C-Determine the final exchange of cash that occurs at the end of the swap

D-Give an example of a situation in which this swap might be appropriate.

Reference no: EM131533040

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