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Suppose Firm A enters into a currency swap with Firm B, and that the deal is done through a SWAP bank that acts as Principal.

Suppose Firm A enters into a currency swap with Firm B, and that the deal is done through a SWAP bank that acts as Principal. At the time of the swap, S= 1.4000 CAD/USD. The notional value of the swap is 100M USD. It is a 5 year swap. The interest paid on the CAD is 4% and on the USD is 3%. Firm A receives CAD and Pays USD. Regarding only the swap transaction, other things being equal, Firm A hopes that CAD interest rates decrease. Select one: O True False

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