What is the initial value of the swap

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Reference no: EM13261313

You been ask to set up a 3-year currency swap for a client that needs to exchange a principal of $25000000 (usd) for Euros that they desperately need for a series of investments in Germany. The payments are made on a semi-annual basis and the contract rates for USD and EUR are 1.5% and 2.2%(respectuveky and given per annum with semi-annual compounding) Assume that the current spot exchange rate is 1.38 USD per Euro. A) What is the intial principal value in Euros? B) Create a chart showing the timing and amount of all cash flows. c) What is the initial value of the swap?

Reference no: EM13261313

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