--%>

Motivations for counterparty to enter into the currency swap

Specify the basic motivations for the counterparty to enter into the currency swap.

E

Expert

Verified

One basic reason for counterparty to enter in the currency swap is to exploit the comparative advantage of other in obtaining the debt financing at the lower interest rate than could be obtained on its own. Second basic reason is to lock in long-term exchange rates in repayment of debt service obligations denominated in the foreign currency.

   Related Questions in Financial Accounting

  • Q : Capital budgeting analysis imperative

    State why is capital budgeting analysis so imperative for the firm?

  • Q : Causes of decreasing of Gross profit

    What are the various causes of decreasing of Gross profit margin?

  • Q : Financial report Details of Assignment

    Details of Assignment : You are required to form a team (group) of 3 to 4 m embers. Let your lecturer know the names of your team members. Select a set o f financial statements for a group of companies and obtain approval from your le cturer for the group of companies that you have selected.

  • Q : Causes of current account deficits

    United States has experienced constant current account deficits since early 1980s. List some of the major causes of the deficits? What could be the consequences of these constant U.S. current account deficits?

  • Q : Fisher Effect and Purchasing Power

    Explain and discuss the significance of Fisher Effect and the Purchasing Power Parity theories to a foreign exchange dealer in the merchant bank?

  • Q : Foreign entity’s functional and parent

    Specify some of instances under FASB 52 that foreign entity’s functional currency would be same as the parent firm’s currency.

  • Q : Investment approach of Bill Miller

    Investment approach of Bill Miller: In comparison to both Warren Buffet and Peter Lynch, Miller is considered to be a slightly more aggressive investor.  Miller believed in playing big which meant that he used

  • Q : What is forfaiting transaction What is

    What is meant by the forfaiting transaction?

  • Q : Types of groups Identify and describe 4

    Identify and describe 4 types of groups; provide examples.

  • Q : Payment method-Buy pound or investing

    When you have visited the London, you have purchased a Jaguar for £35,000, which is payable within the three months. Enough cash is there at your bank in the New York City that pays 0.35% of interest per month, compounding monthly, to pay for car. Presently, spo