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Assume that the Australian borrowing rate and the Swiss borrowing rate for a New Zealand firm is 15% and 6% respectively. The New Zealand cost

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Assume that the Australian borrowing rate and the Swiss borrowing rate for a New Zealand firm is 15% and 6% respectively. The New Zealand cost of borrowing is 15%. The firm decides to fund 50% AUD and 50% Swiss Franc (CHF). The following table shows the probability distribution of possible foreign exchange rate changes of both AUD and Swiss Francs (CHF: AUD CHF Probability change in AUD Probability change in CHF 0.5 0.5 0.13 0.05 0.7 0.3 0.10 Expected AUD and CHF costs are Select one: a. 7.97%, 10.24% b. 10.24%, 7.97% c. 9.18%, 10.41% d. 10.41%, 9.18%

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