International Financial Management 6th Edition by Sanjiv Eun, Cheol Resnick, Bruce Sabherwal

Exercise 6

S. company needs to raise €50,000,000. It plans to raise this money by issuing dollar-denominated bonds and using a currency swap to convert the dollars to euros. The company expects interest rates in both the United States and the euro zone to fall.
a. Should the swap be structured with interest paid at a fixed or a floating rate
b. Should the swap be structured with interest received at a fixed or a floating rate