A US company enters into a currency swap in which pays a fixed rate of 5.5%...
A US company enters into a currency swap in which pays a fixed rate of 5.5% in euros and the counterparty pays a fixed rate of 6.75% in dollars. The notional principals are $100 million and €116.5 million. Payments are made semi-annually and on the basis of 30 days per month and 360 days per year. Calculate the final exchange of payments that the US company receives from its counterparty. [Note: let us assume the last semi-annual payment is included in the final exchange of payments]
Homework Answers
The US company is paying a fixed rate in euros. Hence, it would have received the notional euro amount and paid the notional dollar amount to the counterparty.
Semiannual payment = notional amount * interest rate * (number of days / 360)
The number of days in each semiannual period = number of months in each semiannual period * 30 = 6 * 30 = 180.
Final payment received by US company = notional dollar amount + (notional dollar amount * dollar fixed rate * (180 / 360))
Final payment received by US company = $100 million + ($100 million * 6.75% * (180 / 360))
Final payment received by US company = $103,375,000
Add Answer to:
A US company enters into a currency swap in which pays a fixed
rate of 5.5%...
2. Consider a currency swap in which the domestic party pays a fixed rate in the...
2. 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 principal is $50 million and £30 million The fixed rate is 5.6% in dollars and 65% in pounds. Both sets of payments are made on basis of 30 days per month and 365 days per year and the payments are made semiannually. Determine the initial exchange of...
6. Find the upcoming interest payments in a currency swap in which party A pays U.S. dollars at a fixed rate of 5 perce...
6. Find the upcoming interest payments in a currency swap in which party A pays U.S. dollars at a fixed rate of 5 percent p.a. on a notional amount of $50 million and party B pays Swiss francs at a fixed rate of 4 percent p.a. on a notional amount of SF35 million. Payments are annual under the assumption of 360 days in a year, and there is no netting. A. party A pays $2,500,000, and party B pays SF1,400,000...
Some time ago, a multinational company entered into a currency swap in which it pays 2.8%...
Some time ago, a multinational company entered into a currency swap in which it pays 2.8% on $17 million USD and receives 3.8% on 13 million Euros, both rates are semi-annually compounded. There are three annual payments left, where the first payment is after one year from now, and the current exchange rate of the one Euro is $1.6 USD. If the USD OIS is 2.5% and Euro OIS is 3.5% (both are continuously compounded), what is the value of...
1 Netflix Co. that has been floating rate notes now believes that interese rise I decides...
1 Netflix Co. that has been floating rate notes now believes that interese rise I decides to protect itself nainst this possibility by entering into an in rate swap with a dealer. In this swap, the notional principal is $80 million and the company will pay a fixed rate of 5.5 percent and receive LIBOR. The current LIROU is 5 percent. Calculate the first payment and indicate which party (Netflix or the dealer) prys which Assume that payments will be...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000 and EUR63,000,000, and the GBP rate is 5.50% while the EUR rate is 3.75%. Payments are made semiannually, and the current exchange rate is GBP1.0780/EUR. What are the interest payments each period? a. EUR1,732,500; GBP1,273,388 b. EUR1,273,388; GBP3,465,000 c. EUR1,181,250; GBP1,181,250 d. EUR1,867,635; GBP1,181,250 e. EUR1,181,250; GBP1,867,635
4. A French wine maker is considering a currency swap that will call for the firm...
4. A French wine maker is considering a currency swap that will call for the firm to pay dollars and receive Euros. The dollar notional principal will be $100 million. The swap calls for semiannual payments with a 180/360 adjustment. The current exchange rate is $1.60/ The term structure of the dollar and Euro LIBOR on the day of swap initiation is as follows # of days until payment | Dollar LIBOR ( Euro LIBOR 180 360 540 720 7.00...
1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a...
1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a notional principal amount of Euros 10 million (US$11 million at current spot rate). Aron agrees to pay Brun 5% semi-annually in Euros. Brun Inc agrees to pay US$ LIBOR6 +50 bps semi-annual rate. Based on the following market data, calculate the net Euro payment from Aron Co. (10 marks) LIBOR U SS / Euro spot Net s receipt/ (payment) IT + 6mos T +...
A US company has a liability of €10 million in a fixed-rate bonds outstanding at 6%per...
A US company has a liability of €10 million in a fixed-rate bonds outstanding at 6%per annum. A German company has a $15 million in fixed-rate bonds outstanding at 5.2% per annum. The exchange rate is $1.5/€. Please provide details on the interest rates and currencies that the US company, German company and the swap dealer pays and receives under the swap contract that satisfies the following:•The same swap dealer is involved in this currency swap with the US company...
Consider the following information about an interest rate swap: two-year term, semiannual payment, fixed rate =...
Consider the following information about an interest rate swap: two-year term, semiannual payment, fixed rate = notional USD 10 million. Calculate the net coupon exchange for the first period if LIBOR is 5% at the beginning of the period and 5.5% at the end of the period Q2. 6%, floating rate = LIBOR + 50 basis points, A. Fixed-rate payer pays USD 0 B. Fixed-rate payer pays USD 25,000 C. Fixed-rate payer pays USD 50,000 D. Fixed-rate payer receives USD...
la) Under the terms of a currency swap, a company has agreed to receive a fixed...
la) Under the terms of a currency swap, a company has agreed to receive a fixed interest rate of 10% per annum on an American dollar loan with a notional principal of $5 million. In exchange, the company will pay a fixed interest rate of 8% per annum on a Dutch Euro Loan with a notional principal of €2.5 million. Net interest payments are exchanged every six months. The swap has a remaining life of thirteen months. The current interest...
2. 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 principal is $50 million and £30 million The fixed rate is 5.6% in dollars and 65% in pounds. Both sets of payments are made on basis of 30 days per month and 365 days per year and the payments are made semiannually. Determine the initial exchange of...
6. Find the upcoming interest payments in a currency swap in which party A pays U.S. dollars at a fixed rate of 5 percent p.a. on a notional amount of $50 million and party B pays Swiss francs at a fixed rate of 4 percent p.a. on a notional amount of SF35 million. Payments are annual under the assumption of 360 days in a year, and there is no netting. A. party A pays $2,500,000, and party B pays SF1,400,000...
Some time ago, a multinational company entered into a currency swap in which it pays 2.8% on $17 million USD and receives 3.8% on 13 million Euros, both rates are semi-annually compounded. There are three annual payments left, where the first payment is after one year from now, and the current exchange rate of the one Euro is $1.6 USD. If the USD OIS is 2.5% and Euro OIS is 3.5% (both are continuously compounded), what is the value of...
1 Netflix Co. that has been floating rate notes now believes that interese rise I decides to protect itself nainst this possibility by entering into an in rate swap with a dealer. In this swap, the notional principal is $80 million and the company will pay a fixed rate of 5.5 percent and receive LIBOR. The current LIROU is 5 percent. Calculate the first payment and indicate which party (Netflix or the dealer) prys which Assume that payments will be...
Consider the following fixed-for-fixed currency swap in Euros and British pounds. The notional principals are GBP67,914,000 and EUR63,000,000, and the GBP rate is 5.50% while the EUR rate is 3.75%. Payments are made semiannually, and the current exchange rate is GBP1.0780/EUR. What are the interest payments each period? a. EUR1,732,500; GBP1,273,388 b. EUR1,273,388; GBP3,465,000 c. EUR1,181,250; GBP1,181,250 d. EUR1,867,635; GBP1,181,250 e. EUR1,181,250; GBP1,867,635
4. A French wine maker is considering a currency swap that will call for the firm to pay dollars and receive Euros. The dollar notional principal will be $100 million. The swap calls for semiannual payments with a 180/360 adjustment. The current exchange rate is $1.60/ The term structure of the dollar and Euro LIBOR on the day of swap initiation is as follows # of days until payment | Dollar LIBOR ( Euro LIBOR 180 360 540 720 7.00...
1. Aron Company enters into a 2-year US$ / Euro swap with Brun Inc. on a notional principal amount of Euros 10 million (US$11 million at current spot rate). Aron agrees to pay Brun 5% semi-annually in Euros. Brun Inc agrees to pay US$ LIBOR6 +50 bps semi-annual rate. Based on the following market data, calculate the net Euro payment from Aron Co. (10 marks) LIBOR U SS / Euro spot Net s receipt/ (payment) IT + 6mos T +...
Consider the following information about an interest rate swap: two-year term, semiannual payment, fixed rate = notional USD 10 million. Calculate the net coupon exchange for the first period if LIBOR is 5% at the beginning of the period and 5.5% at the end of the period Q2. 6%, floating rate = LIBOR + 50 basis points, A. Fixed-rate payer pays USD 0 B. Fixed-rate payer pays USD 25,000 C. Fixed-rate payer pays USD 50,000 D. Fixed-rate payer receives USD...
la) Under the terms of a currency swap, a company has agreed to receive a fixed interest rate of 10% per annum on an American dollar loan with a notional principal of $5 million. In exchange, the company will pay a fixed interest rate of 8% per annum on a Dutch Euro Loan with a notional principal of €2.5 million. Net interest payments are exchanged every six months. The swap has a remaining life of thirteen months. The current interest...
Most questions answered within 3 hours.
-
Explain Mertons concept of anomie is and what the
modes of adaptation to it are?
asked 16 minutes ago -
Jamie is doing a survey at her school about whether the students
feel the cafeteria food...
asked 1 hour ago -
How many liters of 0.669 M KOH will be needed to raise the pH of
0.339...
asked 4 hours ago -
A liquid of density 1270 kg/m 3 flows steadily through a pipe of
varying diameter and...
asked 4 hours ago -
Questions: What should the American executive do?
'A visiting American executive finds that a foreign subsidiary...
asked 4 hours ago -
Activity based costing was introduced as an alternative to
absorption costing.
1. Discuss using illustration the...
asked 4 hours ago -
1. You own shares of Crane DVD Company and are interested in
selling them. With so...
asked 4 hours ago -
How many grams of He are necessary to fill a balloon having a
volume of 4.5E3...
asked 4 hours ago -
The 2 patients, still in the hospital, were interviewed by a
MoH epidemiologist. The interviews revealed...
asked 4 hours ago -
An uncharged capacitor and a resistor are connected in series to
a source of emf. If...
asked 4 hours ago -
If assets are $540,000 and liabilities are $236,000 what is the
amount of owner’s equity?
asked 4 hours ago -
MATH 3421 Maple Assignment 1 Due February 13, 2019 Maple is a
Computer Algebra System that...
asked 4 hours ago