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 above

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 helps to determine the fair value of the swap and any potential profits or losses from the transaction. Sending a market order to a swap dealer or 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 are not relevant to pricing a currency swap after inception.

Pricing a Currency Swap After Inception Involves