Question 12 Consider a fixed-for-fixed currency swap. Firm A is a U.S.-based multinational. Firm B is a U.K.-based multinational. Firm A wants to finance a 2 million expansion in Great Britain. Firm B wants to finance a $4 million expansion in the U.S. The spot exchange rate is 1.00 = $2.00. Firm A can borrow dollars at 10 percent and pounds sterling at 12 percent. Firm B can borrow dollars at 9 percent and pounds sterling at 11 percent. Which of the following swaps is mutually beneficial to each party and meets their financing needs? Neither party should face exchange rate risk. O Firm A should borrow $2 million in dollars, pay 11 percent in pounds to Firm B, who in turn borrows 4 million and pays 8 percent in dollars to A. Firm A should borrow $4 million in dollars, pay 11 percent in pounds to Firm B, who in turn borrows 2 million and pays 8 percent in dollars to A. There is no mutually beneficial swap that has neither party facing exchange rate risk. O Firm A should borrow $4 million in dollars, pay 11 percent in pounds to Firm B, who in turn borrows 2 million and pays 10 percent in dollars to A. none of the others