XYZ has a short notional principal to euro. XYZ has a total firm value of $8000 and
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XYZ has a short notional principal to euro. XYZ has a total firm value of $8000 and total USD debt value of $5000. XYZ’s operating exposure to euro is 1.70. $4000 of total debt is euro denominated. Assume swap is “at market” which means market yields are same as original coupon rates.
How much notional principal should XYZ be short in euros in a currency swap to reduce equity exposure to zero?
Related Book For
International Financial Management
ISBN: 978-0078034657
6th Edition
Authors: Cheol S. Eun, Bruce G.Resnick
Posted Date: