Suppose Assicurazioni Generali, the largest insurance company in Italy, wants to fund its operations in the United
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Question:
Suppose Assicurazioni Generali, the largest insurance company in Italy, wants to fund its operations in the United States, and for that, it needs US dollars. But it discovers that it can borrow cheaper in the euro market. The company decides to fund itself in euros and swap the cash flow into US dollars. Assicurazioni is contracting a currency swap on a payfixed million twoyear swap with semiannual interest payments. The swap agreement provides that both parties pay a fixed rate of US interest rate and in theeurozone. Suppose the current exchange rate is Euro $Calculate the semiannual interest payments in this swap contract. Show your work!
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