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Company X Wants to Borrow $10,000,000 Floating for 1 Year;

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Company X wants to borrow $10,000,000 floating for 1 year; company Y wants to borrow £5,000,000 fixed for 1 year.The spot exchange rate is $2 = £1 and IRP calculates the one-year forward rate as $2.00*(1.08) /£1.00*(1.06) = $2.0377/£1.Their external borrowing opportunities are: Company X wants to borrow $10,000,000 floating for 1 year; company Y wants to borrow £5,000,000 fixed for 1 year.The spot exchange rate is $2 = £1 and IRP calculates the one-year forward rate as $2.00*(1.08) /£1.00*(1.06) = $2.0377/£1.Their external borrowing opportunities are:    A swap bank wants to design a profitable interest-only fixed-for-fixed currency swap.In order for X and Y to be interested,they can face no exchange rate risk    What must the values of A and B in the graph shown above be in order for the swap to be of interest to firms X and Y? A) A = £7%; B = $9%. B) A = $8%; B = £6%. C) A = $7%; B = £7%. D) A = $8%; B = £8%.
A swap bank wants to design a profitable interest-only fixed-for-fixed currency swap.In order for X and Y to be interested,they can face no exchange rate risk Company X wants to borrow $10,000,000 floating for 1 year; company Y wants to borrow £5,000,000 fixed for 1 year.The spot exchange rate is $2 = £1 and IRP calculates the one-year forward rate as $2.00*(1.08) /£1.00*(1.06) = $2.0377/£1.Their external borrowing opportunities are:    A swap bank wants to design a profitable interest-only fixed-for-fixed currency swap.In order for X and Y to be interested,they can face no exchange rate risk    What must the values of A and B in the graph shown above be in order for the swap to be of interest to firms X and Y? A) A = £7%; B = $9%. B) A = $8%; B = £6%. C) A = $7%; B = £7%. D) A = $8%; B = £8%.
What must the values of A and B in the graph shown above be in order for the swap to be of interest to firms X and Y?


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