What is the net interest payment

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Reference no: EM131999439

1. Currency swap: Consider a currency swap between Party X in the USA and Party Y in Switzerland. The swap is for $10 million and SF15 million. Party Y pays dollars of interest to X at a fixed interest rate of 9 percent. Party X in USA pays Swiss francs (SF) at a fixed rate of 8 percent. The payments are made semi-annually based on the exact day count and 360 days in a year. The current period has 181 days. At the initiation of the swap, how much will Party X owe (deliver to) Party Y?

A. $10 million

B. SF 15 million

C. $5 million

D. SF5 million

E. None of the above

2. Interest rate swap: Suppose in an interest rate swap, the floating rate is set equal to LIBOR plus 75 basis points. The fixed rate is 5.5%. What is the net interest PAYMENT if we assume a 30-day period, a 360-day year, a notional principal of $25 million, and a LIBOR of 4.5%?

A. $109,375

B. $114,583.33

C. $5,208.33

D. None of the above

Reference no: EM131999439

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