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IRP Application to Short-term Financing Seabreeze Co. needs to finance some dollar-denominated expenses for one year. It can borrow euros cheaper than dollars. Interest rate
IRP Application to Short-term Financing Seabreeze Co. needs to finance some dollar-denominated expenses for one year. It can borrow euros cheaper than dollars. Interest rate parity exists. The one-year forward rate of the euro contains a premium of 4 percent. If it believes the euro will appreciate by 6 percent over the next year, would its expected financing expense be lower if it borrowed dollars or euros?
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