A Mexican corporation issues a $5-$year dollar$-$denominated bond with a face value of USD $60,000,000.$ Subsequently, the company engages in a $5-$year currency swap agreement with a financial institution in order to transform its United States dollar $($USD$)$ exposure into euro $($EUR$)$ exposure. The major amounts involved in the swap are USD$50,000,000$ and EUR$70,000,000.$ The American corporation offers a fixed interest rate of $5$ per cent, while the bank provides a fixed interest rate of $4\mathrm{.}5$ percent. The payments are made semi$-$annually, with each month assumed to have $30$ days and the year assumed to have $360$ days.Determine and provide a rationale for the remuneration disbursed by the financial institution to the corporate entity upon the conclusion of the fourth fiscal ye. 

Answer rating: 100% (QA)

To determine the remuneration disbursed by the financial institution to the corporate entity upon th... View the full answer