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Consider the Situation of Firm a and Firm B $ A $7%6%B$8%5%\begin{array} { l l l } & \$ & € \\\text { A } & \$ 7 \% & € 6 \% \\B & \$8 \% & € 5\%\end{array}

Question 11

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Consider the situation of firm A and firm B.The current exchange rate is $1.50/€.Firm A is a U.S.MNC and wants to borrow €40 million for 2 years.Firm B is a French MNC and wants to borrow $60 million for 2 years.Their borrowing opportunities are as shown; both firms have AAA credit ratings.
$ A $7%6%B$8%5%\begin{array} { l l l } & \$ & € \\\text { A } & \$ 7 \% & € 6 \% \\B & \$8 \% & € 5\%\end{array} Devise a direct swap for A and B that has no swap bank.Show their external borrowing.  Consider the situation of firm A and firm B.The current exchange rate is $1.50/€.Firm A is a U.S.MNC and wants to borrow €40 million for 2 years.Firm B is a French MNC and wants to borrow $60 million for 2 years.Their borrowing opportunities are as shown; both firms have AAA credit ratings.   \begin{array} { l l l }  & \$ & € \\ \text { A } & \$ 7 \% & € 6 \% \\ B & \$8 \% & € 5\% \end{array}  Devise a direct swap for A and B that has no swap bank.Show their external borrowing.

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