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SVEN [57.7K]
3 years ago
14

Suppose the U.S. yield curve is flat at 4% and the euro yield curve is flat at 3%. The current exchange rate is $1.50 per euro.

What will be the swap rate on an agreement to exchange currency over a 3-year period
Business
1 answer:
lianna [129]3 years ago
3 0

Answer:

$4.24287 million per year

Explanation:

Missing question:  The swap will call for the exchange of 1 million euros for a given number of dollars in each year.

For structured three separate forward contracts of the exchange of currencies, the forward price could be found as follows

Forward exchange rate * $1 million error = Dollar to be received

Year 1 = 1.50*(1.04/1.03) * 1 million euros

Year 1 =  1.514563106796117 * 1 million euros

Year 1 =    $1.5145 million

Year 2 = 1.50*(1.04/1.03)^2 * 1 million euros

Year 2 = 1.529267602978604 * 1 million euros

Year 2 = $1.5293 million

Year 3 = 1.50*(1.04/1.03)^3 * 1 million euros

Year 3 = $1.5441 million

The number of dollars each year is determined by computing the present value:

= 1.5145 / 1.04 + 1.5293 /(1.04)^2 +1.5441 / (1.04)^3

= 1.45625 + 1.41392 + 1.3727

= $4.24287 million per year

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ssume you are the Chief Information Officer (CIO)1 of the company that you dream of (any company, real or hypothetical). Give a
MAVERICK [17]

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8 0
3 years ago
Cash flows during the first year of operations for the Harman-Kardon Consulting Company were as follows: Cash collected from cus
Fiesta28 [93]

Answer:

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Explanation:

The formula to compute accrued net income is shown below:

= Revenue - expenses

where,

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And, the expenses equals to

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So, the answer would be equal to

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7 0
3 years ago
which of the following statements accurately describes a quality performance feedback session? a. supervisors must establish mut
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Option A, in which supervisors must build mutual trust and be open to employee challenges, is the appropriate response to this.

<h3>What is feedback?</h3>

When a system's outputs are used again as inputs in a cause-and-effect circuit or loop, this is known as feedback. The system is said to feed back on itself in this case.

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Hence, option A is correct.

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6 0
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