In a Fixed-For-Fixed Currency Swap,3% on a US Dollar Principal

question 1

Multiple Choice

In a fixed-for-fixed currency swap,3% on a US dollar principal of $150 million is received and 4% on a British pound principal of 100 million pounds is paid.The current exchange rate is 1.55 dollar per pound.Interest rates in both countries for all maturities are currently 5% (continuously compounded) .Payments are exchanged every year.The swap has 2.5 years left in its life.What is the value of the swap?

• A)-$7.15
• B)-$8.15
• C)-$9.15
• D)-$10.15

---

Definitions:

Default Judgment

A court decision in favor of the plaintiff when the defendant fails to respond or appear in court.

Voir Dire

The process of questioning potential jurors to ensure that the jury will be made up of nonbiased individuals.

Jury Selection

The process by which judges and attorneys select a jury from a pool of candidates, typically involving questioning to determine their suitability.

Diversity Jurisdiction

A principle allowing federal courts to hear cases where the parties are from different states or countries and the amount in controversy exceeds a certain threshold.