The Present Value of the Series of Dollar Payments in a Currency

question 8

Multiple Choice

The present value of the series of dollar payments in a currency swap per $1 notional amount is $0.03.The present value of the series of euro payments in the same currency swap per €1 is €0.0225.The current exchange rate is $1.05 per euro.If the swap has a notional amount of $100 million and €105 million,find the market value of the swap from the perspective of the party paying euros and receiving dollars.

• A)$519,375
• B)-$2,480,625
• C)$3,000,000
• D)-$3,000,000
• E)-$519,375

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Definitions:

U.S. Union

Labor organizations in the United States that represent the collective interests of workers in various industries and advocate for their rights.

Private and Public Sectors

The division of the economy into two parts; the private sector involves businesses owned by individuals or companies, and the public sector involves organizations owned and operated by the government.

Union Density

The ratio of unionized workers to the total number of workers, indicating the prevalence of union membership within a particular labor market.

United States

A country in North America, consisting of 50 states, a federal district, and several territories, known for its diverse culture and significant impact on global affairs.