Purchase Solution

Swap rate and forward premuim

Not what you're looking for?

Ask Custom Question

4. An investor wishes to buy euros spot (at $0.9080) and
sell euros forward for 180 days (at $0.9146).
a. What is the swap rate on euros?
b. What is the forward premium or discount on 180-
day euros?

Purchase this Solution
Solution Summary

The solution explains the calculation of swap rate and forward premium.

Solution Preview

a. The swap rate is the difference between the forward rate and the spot rate.
Swap rate = ...

Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Organizational Leadership Quiz

This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

View More Free Quizzes
Related BrainMass Solutions

  • swap fixed rate (SFR)

    ; FRA1,1 = 2.258%; FRA1,2 = 2.322%; FRA1,3 = 2.388%; FRA1,4 = 2.520%; FRA1,5 = 2.632%; (Read the notation, FRA1,0 as "six-month forward rate from 01/01/0x, FRA1,1 as "six-month forward rate, six-months from 01/01/0x, FRA1,2 as "six-month forward rate,

  • Interest Rate Swap for Fixed Payment Side

    Method 1: Value the interest rate swap as a long position in floating rate bond and and a short position in a fixed rate bond Value of swap= Value of floating rate Bond- Value of Fixed Rate Bond Notional Principal is not mentioned.

  • Swaps, arbitrage, interest rate swaps & hedging

    How can A and B use a swap to advantage? 2. Explain how Cisco Systems can use arbitrage to create a forward forward to fix the interest rate on a three-month $10 million loan to be taken out in nine months. The loan will be priced off LIBOR.

  • currency swap

    , then Bombardier will receive $15 million each year, regardless of the future spot and forward rates. Note that a sequence of five forward contracts would not be priced at a uniform rate, $1.50/?

  • Walt Disney Company's Yen Financing

    Options require payment of upfront premium and so there will be a cash outflow 2. Forward Contracts - In this Disney could take a forward contract through a bank and sell the Yen forward for US Dollars at a rate that is fixed now.

  • Plain vanilla, two-year interest rate swap

    as "six-month forward rate, one-year from 01/01/0X, etc.)

  • Fx Swap and Locational Arbitrage

    What is the swap rate on euros? In a FX Swap there is an agreement to exchange currencies at the spot rate and then re-exchange the currencies at a forward rate.

  • Interest Rate Swaps, Swap Pricing, and Other Derivative Assets

    - What is a currency swap? - What are interest rate collars, swaptions, and interest rate options? Swap Pricing - How swaps are priced? - How are swaps used as forward contracts? - What are implied forward rates?

  • International Finance

    175167 In the Kodak Australian dollar swap example, suppose Merrill Lynch had been able to arrange a forward contract for the A $70 million at a rate of A $1 = U.S.$0.49. 3.

View More Related Solutions