Suppose the U.S. yield curve is flat at 4% and the euro yield curve is flat at 2%. The current exchange rate is $1.2 per euro. What will be the swap rate on an agreement to exchange currency over a 3-year period? The swap will call for the exchange of 1.1 million euros for a given number of dollars in gach

Suppose the U.S. yield curve is flat at 4% and the euro yield curve is flat at 2%. The current exchange rate is $1.2 per euro. What will be the swap rate on an agreement to exchange currency over a 3-year period? The swap will call for the exchange of 1.1 million euros for a given number of dollars in gach

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 7MC

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Question

Subject:- finance

Suppose the U.S. yield curve is flat at 4% and the
euro yield curve is flat at 2%. The current exchange
rate is $1.2 per euro. What will be the swap rate on
an agreement to exchange currency over a 3-year
period? The swap will call for the exchange of 1.1
million euros for a given number of dollars in each
year. (Do not round intermediate calculations. Enter
your answer in millions rounded to 4 decimal
places.)
the answer 3.8065 shows up imcorrect

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