Financing with a portfolio. Raleigh Ltd needs to borrow funds for one year to finance an expenditure in the United States. The following interest rates are available:

The percentage changes in the spot rates of the Canadian dollar and Japanese yen over the next year are as follows:

If Raleigh Ltd borrows a portfolio, 50% of funds from Canadian dollars and 50% of funds from yen, determine the probability distribution of the effective financing rate of the portfolio. What is the probability that Raleigh will incur a higher effective financing rate from borrowing this portfolio than from borrowing US dollars?

International cash management. Discuss20 Yields for foreign currencies. The Bloomberg website provides interest rate data for many different foreign currencies over various maturities. Its address is: http://www.bloomberg.com.
a Go to the section that shows yields for different foreign currencies. Review the three-month yields of currencies. Assume that you could borrow at a rate 1 percentage point above the quoted yield for each currency. Which currency would offer you the lowest quoted yield?
b As a cash manager of a UK-based MNC that needs dollars to support UK operations, where would you borrow funds for the next three months? Explain.

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US Canada Borrowing Rate 10% 6 Japan 5