Plain vanilla currency swap

CFA Level II
#1

I have not seen any questions on plain vanilla currency swaps and I’m nervous about them. I tried checking previous posts for any topics on this but could not find one that had a clear and good example of how you calculate this. Anyone have a good example of plain vanilla currency swap. I hope I’m not the only one feeling lost on this part. Thanks

#2

I am just reading through the material in schweser for currency swap and I must say…I am really confused…

#3

*possible SPOILER* Hey Deep there’s a pretty good currency swap question in Volume 2 Exam 1 Afternoon Session. Someone correct me if I’m wrong, but currency swaps are similar to interest rate swaps, except cash is actually swapped at the beginning and end of the agreement.

#4

Find the swap rates based on the term structure in both countries to calculated your payments. Find the value of both sides. Figure out what the question is asking (the pay off to the domestic or foreign) convert the value at the spot rate and you’ve got your answer. You calculate the fixed or floating pmts in each currency as you would in a fixed for floating swap. Book seven exam 1 pm question 115.

#5

excellent, as long there is an example somehwere that I can look at it and understand it. Thanks for the feedback.