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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 37

Essay

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} Show how your proposed swap would work for firm A.(e.g.,if you were acting as an agent for the swap bank,try to "sell" firm A on your swap)


Definitions:

Altruism

Altruism is the selfless concern for the well-being of others, leading individuals to perform acts of kindness without expecting personal gain.

Social Loafing

The phenomenon of a person exerting less effort to achieve a goal when they work in a group than when working alone.

Social Facilitation Effect

The tendency for people to perform differently when in the presence of others than when alone, often showing improved performance on tasks.

Performance

The manner in which an individual or group executes and accomplishes tasks or activities, often measured against predefined standards.

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