Suppose that the swap that you proposed in question 2 is now 4 years old (i.e.there is exactly one year to go on the swap).If the spot exchange rate prevailing in year 4 is $1.8778 = €1 and the 1-year forward exchange rate prevailing in year 4 is $1.95 = €1,what is the value of the swap to the party paying dollars? If the swap were initiated today the correct rates would be as shown: 
Consider the situation of firm A and firm B.The current exchange rate is $1.50/€.Firm A is a U.S.MNC and wants to borrow €40 million for 2 years.Firm B is a French MNC and wants to borrow $60 million for 2 years.Their borrowing opportunities are as shown; both firms have AAA credit ratings.
Correct Answer:
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Q70: Explain how this opportunity affects which swap
Q70: Explain how this opportunity affects which swap
Q73: Suppose that the swap that you proposed
Q75: Suppose that you are a swap bank
Q77: Explain how this opportunity affects which swap
Q79: Come up with a swap (exchange of
Q79: Show how your proposed swap would work
Q79: Show how your proposed swap would work
Q81: Consider the borrowing rates for Parties A
Q85: Explain how firm B could use the
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