A French company enters into a currency swap in which it pays a fixed rate of 6% in dollars and the counterparty pays a fixed rate of 5% in euros. The notional principals are €25 million and $40 million. Payments are made semiannually and on the basis of 30 days per month and 360 days per year.
Which of the following statements is correct? At swap initiation:
A no money is exchanged.
B the counterparty pays €25 million to the French company.
C the French company pays €25 million to the counterparty.
D the French company pays $40 million to the counterparty.