Suppose that at the present time, one can enter 5-year swaps that exchange SOFR for 8%. An off- market swap would then be defined as a swap of SOFR for a fixed rate other than 8%. For example, a firm with 11% coupon debt outstanding might like to convert to synthetic floating-rate debt by entering a swap in which it pays SOFR and receives a fixed rate of 11% What up-front payment will be required to induce a counterparty to take the other side of this swap? Assume notional principal is $20 million. Note: Do not round intermediate calculations. Round your final answer to the nearest dollar amount. Up-front payment

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.