Evaluate the initial exchange of cash, Financial Management

Assignment Help:

Consider a currency swap in which the domestic party pays a fixed rate in foreign currency, the UK pounds sterling, 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) Evaluate the initial exchange of cash that occurs at the start of the swap.

(b) Evaluate the semi-annual payments.

(c) Calculate the final exchange of cash that occurs at the end of the swap.

(d) Show an example of a situation in which this swap might be appropriate.


Related Discussions:- Evaluate the initial exchange of cash

Affect the success of a business in international markets, PIAC was apparen...

PIAC was apparently negatively affected by the safety and health concerns of the EU. With 27 countries raising public concern, PIAC's corporate image is likely to have been spoilt

Illustrate example of company objectives, Example of Company Objectives ...

Example of Company Objectives Divide from the problem of which goal a company ought to pursue are the questions of which goals companies claim to pursue and which goals they a

What interest rate is required to yield a balance, Q.  A sum of $2,500 is d...

Q.  A sum of $2,500 is deposited in a bank account that pays 5.25% interest compounded weekly. How long will it take for the deposit to double?  How long will it take you to accrue

Explain the tests of controlor systems based auditing, Tests of controlor s...

Tests of controlor systems based auditing Tests to obtain audit evidence about effective operation of the accounting and internal control systems. It isn't concerned about deta

What is the meaning of deviations, What is the meaning of Deviations De...

What is the meaning of Deviations Deviations must be recorded and investigated regardless of the amount involved and then assess whether deviations are isolated departures or i

Formulation of optimum credit policy, A firm requires a clear policy regard...

A firm requires a clear policy regarding as to whether the credit should be authorized to a customer and if yes to what extent. Credit principles are set for making such decisions.

State the term nature of financial instruments, State the term nature of fi...

State the term nature of financial instruments. Nature of financial instruments (securities): Financial instruments (termed as securities) can be classifies in two broad

Leverages, Evaluate the importance of leverages in financial management of ...

Evaluate the importance of leverages in financial management of small scale companies

Calculate betas against local indexes, Does is make any sense to calculate ...

Does is make any sense to calculate betas against local indexes when a company has a great part of its operations outside this local market? Both the betas calculated against l

Define policy formulation - accounts receivable management, Q. Define Polic...

Q. Define Policy formulation - accounts receivable management This is concerned with set up the framework within which management of accounts receivable in an individual compan

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd