Discuss the sense in which a 5-year currency swap is a sequence of long-term forward contracts. How do the implicit forward exchange rates in a currency swap differ from the long-term forward exchange rates for those maturities?
What will be an ideal response?
A 5-year currency swap is an agreement to exchange certain amounts of two currencies in the future, which sounds very similar to a forward contract. Unlike forward contracts, though, the amounts are the same for the first four years, equal to the interest on the principals of the two currencies. Then, in the fifth year, the interest and principals on the two currencies are exchanged. The principals were originally equal in value at the original spot exchange rate, but they will generally not be equal in value at the final spot exchange rate.
You might also like to view...
The date on which the principal amount is repaid to the bondholder is known as the ________.
A) issuing date B) interest date C) maturity date D) installment date
Don, the owner of a bait and tackle shop, attended an entrepreneurship workshop that discussed the triple bottom line, which measures an organization's ____ performance.
A. social, environmental, and financial B. financial, diversity, and environmental C. social, synergy, and diversity D. marketing, profit, and efficiency E. social, effectiveness, and financial
The APA requires that all federal administrative hearings be held in Washington,
DC. a. True b. False
Francesca is building her founding team. She knows that fundraising will be important over the next year and thus is looking for someone with strong fundraising skills. She hopes to be financially self-sufficient at the end of the year. Later, she hopes to be able to build a strong sales, marketing, and operations teams with representation across the nation. What strategy should Francesca use in building her team?
What will be an ideal response?