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i need simple explain please 10) Company A wishes to bort Dollars at...

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Finance

imagei need simple explain please

10) Company A wishes to bort Dollars at a fixed rate of interest. The amounts requin current exchange rate. They have been quoted the follow tax effects): es to borrow Yen at a fixed rate of interest. Company B wishes to borrow US aterest. The amounts required by two companies are roughly the same at y have been quoted the following rates per annum (adjusted for differential Company A Company B Yen 8.6% 7.0% US Dollars 4.6% 4.3% are designing a swap that will net the financial intermediary 0.3% per annum (ignore the currency differences). a) How much each company may gain from the SWAP? b) Plot a diagram showing the interest payments under the swap in which all foreign exchange risk is assumed by the bank. Make sure to write down, interest rates that each party is paying (and/or receiving) and currencies, and to draw appropriate arrows that show the direction of payment. (8 points)

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