Question
Atlas Inc is a Swiss company whose only debt is a U.S. dollar-denominated loan paying a floating-rate of interest. The loan has 10 years to
Atlas Inc is a Swiss company whose only debt is a U.S. dollar-denominated loan paying a floating-rate of interest. The loan has 10 years to maturity. Sally, the CFO at Atlas, believes U.S. interest-rates will rise over the next few months and stay high over the next years. On the other hand, Sally thinks Swiss interest-rates will come down over the next few months and stay low. What should Sally, the CFO at Atlas, do? Pick the best answer.
a) Atlas should enter into a 10 year cross-currency swap where it pays floating-rate dollar interest payments to a bank and it receives floating-rate interest payments in Swiss francs. b) Atlas should enter into a 10 year cross-currency swap where it receives floating-rate dollar interest payments from a bank and it pays floating-rate interest payments in Swiss francs. c) Atlas should enter into a 10 year cross-currency swap where it pays fixed-rate dollar interest payments to a bank and it receives floating-rate interest payments in Swiss francs. d) Atlas should enter into a 10 year cross-currency swap where it receives floating-rate dollar interest payments from a bank and it pays fixed-rate interest payments in Swiss francs. e) Atlas should enter into a 10 year cross-currency swap where it receives fixed-rate dollar interest payments from a bank and it pays fixed-rate interest payments in Swiss francs.
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