Consider the situation of firm A and firm B. The current exchange rate is $1.50/. Firm A is a U.S. MNC and wants to borrow 40 million for 2 years. Firm B is a French MNC and wants to borrow $60 million for 2 years. Their borrowing opportunities are as shown; both firms have AAA credit ratings.

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 B $65 $78 5 43 Explain how firm B could use the forward exchange markets to redenominate a 2-year 30m 4 percent pound sterling loan into a 2-year USD-denominated loan. Short Answer Toolbar navigation B 1 U A