Pricing a currency swap after inception involves
A)finding the difference between the present values of the payments streams the party will receive in one currency and pay in the other currency,converted to a common currency.
B)sending a market order to a swap dealer.
C)finding the sum of the present values of the payments streams that each party will receive in one currency and pay in the other currency,converted to a common currency.
D)none of the options

Question

Quizplus · Accepted Answer

Pricing a currency swap after inception involves finding the difference between the present values of the payments streams the party will receive in one currency and pay in the other currency, converted to a common currency. This reflects the current market value of the swap and helps determine the cost of continuing or terminating the swap. Option B is incorrect because sending a market order to a swap dealer is not necessarily involved in pricing a currency swap after inception. Option C is incorrect because the sum of present values of the payment streams of each party would not reflect the net cost or value of continuing or terminating the swap. Option D is incorrect because one of the options is the correct answer.

Pricing a Currency Swap After Inception Involves