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How do u calculate the annual percentage of interest saving here?
This is wat I did and its halfway wrong with the MS, can u help me how to do this?Can u explain me how to get the best case and worst case rates for each yrs?
Fees should be deducted nah, why adding here?
Explain me the down part as well with worst case rates -23.42 0.27, how do arrive at these figures….First question:
The question says that Galeplus gets 75% of any benefit after deducting bank fees.
Therefore they save 75% x (2.55% – 0.75%) = 1.35%
But surely you could see that from the workings in the answer?
Why on earth should fees be deducted? The question says that they are earning fees.
The best and worst case PV’s are arrived at by converting the rubbits PV’s to GBP PV’s at the best and worst case exchange rates that are show above.
Please do not post any more scans of books – it is breach of copyright.
Ok got some idea, thnks for the reply.
Srry about the scanned image, theres alot to type 🙂Hello Sir,
Please confirm the overall arbitrage opportunity from using a currency swap is 2.55% is the sum of the fixed interest rate of 2.05 and floating of 0.5 i am a bit confused because the answer has the fixed interest as a negative -2.05%?
The answer states that the overall benefit is 2.55%. It seems you are just looking at one part of the workings – read the sentence below in the answer 🙂
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