To Avoid Exchange Rate Risk When Borrowing a Foreign Currency

question 42

True/False

To avoid exchange rate risk when borrowing a foreign currency, an MNC could hedge its position by using interest rate swaps.

Evaluate the effects of externalities on the efficiency of the market outcomes.

Identify and justify the use of taxes or subsidies to achieve social optimum.

Analyze the impact of externalities on private and social costs and benefits.

Explain the concept of market equilibrium and how it is affected by externalities.

---

Definitions:

Stock Option Plans

Programs that grant employees the option to purchase a company's stock at a predetermined price, often used as a form of compensation.

Market Price

The current price at which an asset or service can be bought or sold in a marketplace.

Treasury Shares

Stock that has been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Par Value

Par value is a nominal value assigned to a security or stock as stated in its corporate charter, often used to determine legal capital or face value.