Question
1. We have learnt s waps such as interest rate swap and currency swap. They are very valuable in the international financing because they permit
1. We have learnt swaps such as interest rate swap and currency swap. They are very valuable in the international financing because they permit firms to
a) tap new capital markets
b) reduce risks
c) reduce taxes
d) a and b only
2. We have learnt in class a type of financing instruments in that two international firms can exchange long term debt issued in one currency for the service commitment on a certain principal amount of debt issued in another currency. Such instrument is known as
a) a currency swap
b) an interest rate swap
c) a floating-rate bond
d) a fixed-rate bond
3. We have learnt in class a type of financing instruments in that two international firms can agree to exchange interest payments that have different borrowing costs for a specific maturity in an agreed upon notional amount. Such instrument is known as
a) a currency swap
b) an interest rate swap
c) a forward forward
d) a forward rate agreement (FRA)
4. Which of the follows is a basic hedging strategy for translation exposure
a) reducing hard currency assets and soft currency liabilities
b) increasing hard currency liabilities and soft currency assets
c) reducing soft currency assets and hard currency liabilities
d) converting soft currencies to hard currencies and lending hard currencies
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started