# A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates 10,000,000 a year, received annually.

A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates €10,000,000 a year, received annually. The British company wishes to convert the euro cash flows to pounds once a year. It plans to engage in a currency swap in order to lock in the exchange rate at which it can convert the euros to pounds. The current exchange rate is €1.23/£. The fixed rate on a plain vanilla 5-year currency swap in pounds is 1.20% per year, and the fixed rate on a plain vanilla 5-year currency swap in euros is 1.00% per year.

a. Determine the notional principals in euros and pounds for a swap with annual payments that will help achieve the objective.

b. Determine the annual cash flows from this swap, and illustrate the cash flows with a swap diagram.

c. Calculate the effective exchange rate at which the payments are swapped.

1.a)The annual cash flows must be converted into pounds (10000000 Euros)In order to create a swap to convert the 10000000 Euros the notional principals are:Euro notional principal=…

## Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
\$26
The price is based on these factors:
Number of pages
Urgency
Basic features
• Free title page and bibliography
• Unlimited revisions
• Plagiarism-free guarantee
• Money-back guarantee
On-demand options
• Writer’s samples
• Part-by-part delivery
• Overnight delivery
• Copies of used sources
Paper format
• 275 words per page
• 12 pt Arial/Times New Roman
• Double line spacing
• Any citation style (APA, MLA, Chicago/Turabian, Harvard)

# Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

### Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

### Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

### Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.