Swap Question for the Sharper Tools in the Box guess, understand, interview, generated

luda002

Hello,
Hopefully some of you can help me understand the answer to a question I was asked in an interview. Thankfully, I pretty much guessed the right answer but the maths of it are still unknown to me. Should consult the books, I suppose…
Anyway, q goes something like:
A perfect hedge, pay Euribor, receive USD fixed.
What will be the income generated from this swap?
Answer: USD money market rate.
I guess this is to do with the FX rate interest-rate differential but if anyone can give me
a definitive answer, I would appreciate it.
It’s keeping me awake at night…
Many thanks.

Mechanic

Was this a multiple choice Q? If so what were the other options?
The income from this swap is the USD fixed rate since that is what is being “received”.
however, the profit would be the USD Fixed rate minus the Euribor Rate.
The USD Fixed rate would probably be close to a USD money market rate since this is Supposedly a “risk free” type of investment, but to say it would be equal to this rate is a little presumptuous.
Depending on what other answers there were this may be the best of all the choices.