ABC Corp. entered into a currency swap with its bank, providing that ABC borrows $5 million at 10% and swaps for a 12% yen loan. The spot exchange rate is ¥105/$. If interest only is to be repaid on an annual basis, how much does ABC pay annually to the bank?
A) ¥1.26 million
B) ¥5.71 million
C) ¥52.50 million
D)¥63.00 million

Question

Quizplus · Accepted Answer

Annual interest payment = ($5 million × ¥105/$) × 0.12 = ¥63 million

ABC Corp Entered into a Currency Swap with Its Bank, Providing