Question
Morning Star Air, headquartered in Kunming, China, needs US$5,000,000 for one year to finance working capital. The airline has two alternatives for borrowing: a. Borrow
Morning Star Air, headquartered in Kunming, China, needs US$5,000,000 for one year to finance working capital. The airline has two alternatives for borrowing:
a. Borrow US$5,000,000 in Eurodollars in London at 7.250% per annum
b. Borrow HK$39,000,000 in Hong Kong at 7.00% per annum, and exchange these Hong Kong dollars for U.S. dollars.
At what ending exchange rate would Morning Star Air be indifferent between borrowing U.S. dollars and borrowing Hong Kong dollars?
can you give me cauculation details for this problem?
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Option Volatility And Pricing Advanced Trading Strategies And Techniques
Authors: Sheldon Natenberg
2nd Edition
0071818774, 978-0071818773
