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Can someone do this step by step ? Consider two companies: Komatsu and Chrysler. Komatsu (a Japanese company) wants to borrow USS for the following
Can someone do this step by step ?
Consider two companies: Komatsu and Chrysler. Komatsu (a Japanese company) wants to borrow USS for the following 6 years at a fixed rate, while Chrysler wants to borrow Yen also for the following 6 years at a fixed rate. The rates available to two companies in USS and Yen markets are shown below USS 50% 500% 0% Chrysler Komatsu (a) What is the total gain from the currency swap? (6 pts) (b) Which firm has the comparative advantage in Yen market, Chrysler or Komatsu? (4 pts) ntermediary. Suppose that In part e design a currency swap with a Financial Institution as an i financial institution will earn 10 basis points, the remaining total gain will be split equally between Komatsu and Chrysler. (c) Complete chart below. Near each arrow indicate the interest rate and the currency in which it will be paid/received. Answers must show two digits after the decimal point pts) Financial Institution Komatsu _| Chrysler
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