Consider the situation of firm A and firm B. The current exchange rate is $2.00/ Firm A is a U.S. MNC and wants to borrow 30 million for 2 years. Firm B is a British MNC and wants to borrow $60 million for 2 years. Their borrowing opportunities are as shown, both firms have AAA credit ratings. A $ $6% $7% 5% 4% B The IRP 1-year and 2-year forward exchange rates are T: ( 8 ) $2.00 x (1.06) 1.00 x (1.04) $2.0385 1.00 F2 ( $ ) $2.00 X (1.06) 1.00 x (1.04) $2.0777 1.00 USD Bid Ask 6% 6.1% pounds Bid Ask 4% 4.1% Explain how this opportunity affects which swap firm B will be willing to participate in. Consider the situation of firm A and firm B. The current exchange rate is $2.00/ Firm A is a U.S. MNC and wants to borrow 30 million for 2 years. Firm B is a British MNC and wants to borrow $60 million for 2 years. Their borrowing opportunities are as shown, both firms have AAA credit ratings. A $ $6% $7% 5% 4% B The IRP 1-year and 2-year forward exchange rates are T: ( 8 ) $2.00 x (1.06) 1.00 x (1.04) $2.0385 1.00 F2 ( $ ) $2.00 X (1.06) 1.00 x (1.04) $2.0777 1.00 USD Bid Ask 6% 6.1% pounds Bid Ask 4% 4.1% Explain how this opportunity affects which swap firm B will be willing to participate in