Suppose a U.S. firm operating in the European Region. The U.S. firm wants to convert all...
Suppose a U.S. firm operating in the European Region. The U.S. firm wants to convert all the euros back to USD and therefore, the US firm wants to enter a currency swap. Which one of the following actions is wrong regarding the currency swap?
A.) At Time=0 the US firm deposits USD to European Bank
B.) At Time=0, the US firm deposits Euros to the European Bank
C.) At every payment, the US firm pays Euros to the European Bank
Homework Answers
Option A is wrong
At Time=0 the US firm deposits USD to European Bank
Explanation:
Firm wants exposure of USD by replacing Euro, so firm will give Euro to the bank at initiation and buy USD to get USD exposure.
Add Answer to:
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