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QUESTION 2 Consider the following information: Firm U.S. $ (USD) General Electric (GE) 9% Qantas Airways 11% AUS $ (AUD) 7.5% 8.5% The Qantas would

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QUESTION 2 Consider the following information: Firm U.S. $ (USD) General Electric (GE) 9% Qantas Airways 11% AUS $ (AUD) 7.5% 8.5% The Qantas would like to borrow $25 million for five years in US, while GE would like to issue a 5-year A$31.25 million bond in Australia. A swap dealer suggested to the firms that they could benefit by borrowing in the market where they have a comparative advantage and then agreeing on a fixed-for-fixed currency swap to revert to the currency they desired for their loan. Assume that both firms will equally share the potential benefits from the swap. Which market provides a comparative advantage to GE and Qantas in borrowing money? AUD for GE, USD for Qantas O USD for GE, AUD for Qantas USD for GE, USD for Qantas O AUD for GE, AUD for Qantas

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