Assume US Interest Rates Are Significantly Higher Than German Rates

question 51

Multiple Choice

Assume U.S. interest rates are significantly higher than German rates. A U.S. firm with a German subsidiary could achieve a lower financing rate without exchange rate risk by denominating thebonds in

• A) dollars.
• B) euros and making payments from U.S. headquarters.
• C) euros and making payments from its German subsidiary.
• D) dollars and making payments from its German subsidiary.

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