Company X Wants to Borrow $10,000,000 Floating for 1 Year;

question 33

Multiple Choice

Company X wants to borrow $10,000,000 floating for 1 year; company Y wants to borrow £5,000,000 fixed for 1 year.The spot exchange rate is $2 = £1 and IRP calculates the one-year forward rate as $2.00 × (1.08) /£1.00 × (1.06) = $2.0377/£1.Their external borrowing opportunities are: $$\begin{array} { c c c } & \text { \$Borrowing } & \text { £Borrowing } \\ & \text { Cost } & \text { Cost } \\\text { Compary X }& \$ 8 \% & £ 7 \% \\\text { Compary Y } & \$ 9 \% & £ G \%\end{array}$$ A swap bank wants to design a profitable interest-only fixed-for-fixed currency swap.In order for X and Y to be interested,they can face no exchange rate risk.
What must the values of A and B in the graph shown above be in order for the swap to be of interest to firms X and Y?

• A)A = £7%; B = $9%.
• B)A = $8%; B = £6%.
• C)A = $7%; B = £7%.
• D)A = $8%; B = £8%.

Understand the application of agency principles to partnership operations and partner actions.

Comprehend the division of profits and losses and the factors affecting such division in partnerships.

Understand the basic mechanisms of gene expression regulation across different organisms.

Grasp the role and mechanisms of miRNA and siRNA in gene silencing.

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