--%>
Assignment Help - homework help

Basic motivations for counterparty to enter in currency swap

Discuss the fundamental motivations for a counterparty to enter in a currency swap.
One fundamental reason for a counterparty to enter in a currency swap is to exploit the comparative benefit of the other in gaining debt financing at a lower interest rate than could be obtained on its own. A second basic cause is to lock in long-term exchange rates in the repayment of debt service obligations denominated in a foreign currency.

   Related Questions in Financial Management

  • Q : Very small amount of debt is as

    An optimal capital structure exists, explain the reasons. Why very small amount of debt is as undesirable as is very big amount debt?

    		•
  • Q : Illustrates the Epstein–Wilmott model

    Illustrates the Epstein–Wilmott model?

    		•
  • Q : What is Hedge What is Hedge?

    What is Hedge?

    		•
  • Q : Arbitrage profit and IRP based question

    Presently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The interest rate of three month is equal to 8.0% per annum in the U.S. & 5.8% per annum in the U.K.  One can borrow as much as $1,500,000 o

    		•
  • Q : Determine value of put option with same

    Stock price is $98; and European call option struck at $100 along with an expiration of nine months has a value of $9.07. There nine-month, compounded continuously, interest rate is 4.5%. So find out the value of the put option with the same strike and expirat

    		•
  • Q : Explain different forms of market

    Explain different forms of market efficiency.

    		•
  • Q : Describe European Monetary System

    Describe the arrangements & workings of the European Monetary System (EMS).EMS was launched in the year of 1979 in order to (I) set up zone of monetary stability in Europe, (ii) coordinate exchange rate policies against non-EMS currencies, a

    		•
  • Q : FM Based on the information below,

    Based on the information below, calculate the weighted average cost of capital. Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 10%. They had 25-year terms and $1,000 face values. They are now selling to yield 9%. Th

    		•
  • Q : How are short or future option margins

    How are short or future option margins to be paid at credit risk?

    		•
  • Q : Foreign exchange transactions among

    How are foreign exchange transactions among international banks settled?The interbank market is network of correspondent banking relationships, along with large commercial banks maintaining demand deposit accounts along with one another, known a

    		•