Company X and Company Y Have Mirror-Image Financing Needs (They

question 77

Multiple Choice

Company X and company Y have mirror-image financing needs (they both want to borrow equivalent amounts for the same amount of time. Company X has a AAA credit rating, but company Y's credit standing is considerably lower.

• A)Company X should demand most of the QSD in any swap with Y as compensation for default risk.
• B)Since Y has a poor credit rating, it would not be a participant in the swap market.
• C)Company X should more readily agree to a swap involving Y if there is also a swap bank providing credit risk intermediation.
• D)both a and c

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Definitions:

Attitudes

A psychological tendency expressed by evaluating a particular entity with some degree of favor or disfavor.

Cultural Distance

The measure of how different one culture is from another, which can impact international business operations, communications, and negotiations.

Organizations

Social entities that are goal-directed, are designed as deliberately structured and coordinated activity systems, and are linked to the external environment.

Benefits

Compensation or perks provided to employees in addition to their salary, such as health insurance, retirement plans, and paid time off.