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Thank you for the response. How about they use “the” in “the swap” in?:
“Buryecs Co’s bank would charge an annual fee of 0·5% in € for arranging the swap.”
It looks like that fee of 0·5% relates to the swap of providing currency rate exchange now and in three years time (let’s call it swap 1), but in fact it relates to interest rate swap (swap 2).
Hello! Sorry for my English. Why would ACCA make such a confusing text? It is unknown where the first swap’s terms end and where the second’s start. It turned out there are two swaps: a swap that exchange EUR to USD at the beginning and at the end of the three-year period in the dollar amount of 5,000 USD (more like a Forward contract to me) and the swap involving interest rates on loans on different currencies. They use “the swap …” wording with “the” when talking about the 0.5% fee which makes it look like some kind of a combined swap, but in fact, these are two separated swaps and the calculations are also separated . I spent 30 minutes trying to solve this riddle and I failed. It looks very unethical
Buryecs Co’s finance director (FD) has contacted its bankers with a view to arranging a currency swap, since he believes that this will be the best way to manage financial risks associated with the franchise. The swap would be for the initial fee paid for the franchise, with a swap of principal immediately and in three years’ time, both these swaps being at today’s spot rate. Buryecs Co’s bank would charge an annual fee of 0·5% in € for arranging the swap.