Using the forward FX curve from the preceding problem, convert an annual five-year stream of 75 basis points received in dollars into a similar stream received in euros. You need to express your answer in a number of euro basis points.

Data in preceding problem

In the preceding problem, suppose you can also access floating-rate financing as follows: 

• Dollar financing at: one-year $-Libor + 50bps. 

• Euro financing at: one-year €-Libor + 100 bps. 

Also traded in the market are the following two swaps: 

• Interest rate swap: fixed $2.0-2.2% vs. floating one-year $-Libor. 

• Currency swap: fixed €3.0-3.2% vs. floating one-year $-Libor. 

Now find the cheapest form of dollar financing.