Which of the Following Statements Is FALSE

question 105

Multiple Choice

Which of the following statements is FALSE?

• A)Using a currency swap, a firm can borrow in the market where it has the best access to capital, and then 'swap' the coupon and principal payments to whichever currency it would prefer to make payments in.
• B)Currency swaps generally also have final face value payments, also in different currencies.
• C)With differential access to national markets, to maximise shareholder value, the firm should raise capital in the foreign market; the method of valuing the foreign project as if it were a domestic project would then provide the correct net present value (NPV).
• D)Differential access to national capital markets is common enough that it provides the best explanation for the existence of currency swaps, which are like interest rate swap contracts, but with the holder receiving coupons in one currency and paying coupons denominated in a different currency.

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Definitions:

Students for a Democratic Society

An American student organization in the 1960s, known for its activism against the Vietnam War and for civil rights, playing a key role in the American New Left movement.

University of Michigan

A public research university located in Ann Arbor, Michigan, known for its diverse and comprehensive academic programs, research initiatives, and sports teams.

Civil Rights Movement

A decades-long struggle, mainly during the 1950s and 1960s, by African Americans to end racial segregation and discrimination in the United States.

Counterculture

A subculture whose values and norms of behavior differ substantially from those of mainstream society, often in opposition to prevailing social norms.