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John works for a German firm. His firm needs $300,000 US in the USA for a year. As his firm is unknown in the USA,
John works for a German firm. His firm needs $300,000 US in the USA for a year. As his firm is unknown in the USA, it is unable to get a credit line in the USA. Current one year forward rate is 3. 1S/€ and spot rate is 3S/€. He can borrow up to €1,000,000 at an interest rate of 8% in Germany. Given the information and his opportunities, he decides to generate a synthetic credit line using his bank facility. what will be The implied interest rate for his synthetic credit line?
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To generate a synthetic credit line John can borrow 1000000 at 8 interest rate in Germany and conver...
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Financial Accounting and Reporting a Global Perspective
Authors: Michel Lebas, Herve Stolowy, Yuan Ding
4th edition
978-1408066621, 1408066629, 1408076861, 978-1408076866
