When an MNC Borrows in Two Foreign Currencies with Lower

question 34

True/False

When an MNC borrows in two foreign currencies with lower interest rates than the U.S. rate, the portfolio will have a higher effective financing rate than a loan in U.S. dollars if both currencies depreciate simultaneously against the dollar.

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Definitions:

Direct Experience

A method of gaining knowledge through firsthand, personal experience rather than through secondhand information.

Aversion

A strong feeling of dislike or opposition towards something or someone.

Algebra

A branch of mathematics dealing with symbols and the rules for manipulating those symbols, representing numbers and relationships.

Social Learning

The process of deriving attitudes from family, peer groups, religious organizations, and culture.