Which of the Following Is an Unlikely Reason for Firms

question 28

Multiple Choice

Which of the following is an unlikely reason for firms to participate in the swap market?

• A) To replace cash flows scheduled in an undesired currency with cash flows in a desired currency.
• B) Firms may raise capital in one currency but desire to repay it in another currency.
• C) Firms desire to swap fixed and variable payment or receipt of funds.
• D) All of the above are likely reasons for a firm to enter the swap market.

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Definitions:

Incremental Value

Refers to the additional value generated by undertaking a certain action, decision, or investment, compared to doing nothing.

Shares Outstanding

The total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Market Price

The current selling or buying price for an asset or service.

NPV

Net Present Value; a calculation used to determine the present value of an investment's future cash flows minus the initial investment cost.