Which of the Following Is a Major Reason for Firms

question 88

Multiple Choice

Which of the following is a major reason for firms to engage in currency swaps?

• A)They will only be required to repay the interest.
• B)They can obtain more favourable borrowing terms in a different currency.
• C)The debt will not show on their balance sheets.
• D)Borrowing in a foreign currency offers lucrative tax breaks.

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Definitions:

Equity Risk Premium

The extra return that investors require for choosing equity over risk-free securities, accounting for the higher risk of stocks.

Business Valuation

The process of determining the economic value of a whole business or company unit based on its financial performance and position.

Intrinsic Value

The actual worth of an asset or investment, determined through fundamental analysis without reference to its market value.

Accrual Accounting

A bookkeeping technique where income and costs are logged at the point of occurrence, irrespective of the actual cash exchange dates.