Multiple Choice
Two companies would like to borrow money. Company A is offered a fixed rate of 4% and afloating rate of the BA rate (= the current yield on Bankers' Acceptances) + 0.4%. Company B isoffered a fixed rate of 6% and a floating rate of the BA rate + 1.4%. Given this information, which of the following statements is correct?
A) Both companies has a comparative advantage in the floating-rate market
B) Company B has a comparative advantage in the floating rate market
C) Company A has a comparative advantage in the floating rate market
D) Both companies has a comparative advantage in the fixed-rate market
Correct Answer:
Verified
Correct Answer:
Verified
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