6. Find the upcoming interest payments in a currency swap in which party A pays

Question

6. Find the upcoming interest payments in a currency swap in which party A pays Find the upcoined rate of 5 percent pa.on a f 4 percent p.a. on a noti 60 U.S. dollars at a fixed rate of 5 percent p.a. on a notional amount of $50 million and party B pays Swiss francs at a fixed rate of 4 percent p.a. on a notional amount of SF35 million. Payments are annual under the assumption of 360 days in a year, and there is no netting. A. party A pays $2,500,000, and party B pays SF1,400,000 B. party A pays SF1,400,000, and party B pays $2,500,000 C. party A pays SF1,750,000, and party B pays SF1,400,000 D. party A pays $2,500,000, and party B pays $2,000,000 E. party A pays $50 million, and party B pays SF35 million

Explanation / Answer

Option A

party A would pay 50*5%=2.5 million dollars

party B would pay 35*4%=1.4 million Swiss francs

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