2 Assume that Jim decides to finance his proposed US business with dollar-denominated debt, if he does implement the US business idea. How could he use a currency swap along with the debt to reduce the firm’s exposure to exchange rate risk?

The Sports Exports Company continues to focus on producing basketballs in Ireland and exporting them to the United Kingdom. The exports are denominated in pounds, which has continually exposed the firm to exchange rate risk. It is now considering a new form of expansion where it would sell specialty sporting goods in the United States. If it pursues this US project, it will need to borrow long-term funds. The dollardenominated debt has an interest rate that is slightly lower than the pound-denominated debt.