Your firm needs to borrow the equivalent of $10,000,000. The rates at which you can borrow in various countries are: US: 7% UK: 5% Europe: 8% Japan: 3% a) If the IFE holds and you were not going to hedge your exchange rate risk, from where would you prefer to borrow and why? (4 points)

b) If IRP holds and you were to hedge your exchange rate risk, from where would you prefer to borrow and why? (4 points)