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Swap contract - from a banker's perspective Suppose Firm A can issue 7-years bonds in Germany at the fixed rate of 3% and in the
Swap contract - from a banker's perspective Suppose Firm A can issue 7-years bonds in Germany at the fixed rate of 3% and in the U.S. at 8%. Suppose Firm B can issue 7-years bonds at the fixed rate of 5% in Germany and at 9% in the United States. (a) Which firm has a comparative advantage in the U.S. capital market? (b) How would you advise both firms so that they take advantage of each other's comparative advantage in the German and U.S. capital markets? (c) How much could be saved in borrowing costs by both firms? (d) What could cause the relative comparative advantages in international credit markets
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