ABC CorpEntered into a Currency Swap with Its Bank, Providing That

question 113

Multiple Choice

ABC Corp.entered into a currency swap with its bank, providing that ABC borrows $5 million at 10 percent and swaps for a 12 percent yen loan.The spot exchange rate is ¥105/$.If interest only is to be repaid on an annual basis, how much does ABC pay annually to the bank? (answer in millions)

• A)¥1.26 million
• B)¥5.71 million
• C)¥52.50 million
• D)¥63.00 million

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