Workshop #3 - SWAPS

You have a debt in Brazilian Reals. The bank in Brazil gives you the opportunity to pay it back in Indian Rupees. According to the behavior of the following graph, in which day would you exchange BRL for INR? Why?

10 years ago, the average school tuition for a good and private school in Bogotá was worth $1'100,000 COP. If the inflation across those years is 150%, how much do parents have to pay nowadays?

Inflation is measured as a percentage.

• True

• False

You can only exchange Swaps in the stock market.

• True

• False

You are going to lend 3,800 Euros to a work colleague. Your colleague will pay you back in Egyptian pounds. The exchange rate in that moment is 33 EGP/Euro.

a) If you set a fixed exchange rate of payment for the same exchange rate, someone benefits from this swap? Yes? No? why?

b) If you set a float exchange rate for the payment, and the market sets a lower exchange rate, someone benefits from this swap? Yes? No? why?

In SWAPS you can exchange cash or liabilities.

• True

• False

7 years ago the price of a Casio Scientific Calculator was $28,000 COP. Now the price is $60,000 COP. Calculate the inflation that affected the price of the calculator. (Type your answer as a decimal or as a percentage)