Floating for Floating Currency Swaps

question 6

Multiple Choice

Floating for floating currency swaps

• A)the reference rates are different for the different currencies: e.g. dollar LIBOR versus euro LIBOR.
• B)do not exist.
• C)offer the swap bank a built-in hedge.
• D)none of the above

Recognize the implications of working capital management decisions on a firm’s liquidity.

Analyze the role of seasonal fluctuations on working capital needs.

Comprehend the cash conversion cycle and its components.

Understand the impact of working capital on a firm’s financial policies.

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Definitions:

Output

The cumulative production of goods and services by an economy over a given time frame.

External Cost

Costs of a transaction or activity that affect people other than those directly involved in the transaction, often not reflected in the market prices.

Social Cost

The total cost to society of an action, including both private costs borne by individuals and external costs absorbed by others.

Gallon

A unit of volume for liquid measure equal to four quarts, used in the United States and the United Kingdom.