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

question 42

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.
Company X

• A)is probably British.
• B)is probably American.
• C)has a comparative advantage in borrowing pounds.
• D)is probably British,and has a comparative advantage in borrowing pounds.

Recognize the impact of socioeconomic factors on adolescent employment and its consequences.

Understand the role of educational transitions and their challenges during adolescence.

Identify the elements of effective programs designed to prevent school dropouts.

Comprehend the psychological aspects of adolescence, including egocentrism and moral development.

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Definitions:

Type I Error

The incorrect rejection of a true null hypothesis, also known as a "false positive".

Effect Size

A quantitative measure of the magnitude of the difference between groups or the strength of the relationship between variables in a statistical analysis.

Null Hypothesis

A statement positing that there is no significant difference or effect, often the initial assumption in hypothesis testing.

Type II Error

The error made when a test fails to reject a false null hypothesis, often denoted by beta (β).