Which Strategy Below Would Take Advantage of the Following Comparative

question 60

Multiple Choice

Which strategy below would take advantage of the following comparative advantage?

• A)Company X should borrow fixed and Company Y should borrow floating, then they should swap their interest payments.
• B)Company X should borrow floating and Company Y should borrow fixed, then they should swap their interest payments.
• C)Company X should borrow fixed and Company Y should borrow floating, but there is no benefit to a entering a swap.
• D)Company X should borrow floating and Company Y should borrow fixed, but there is no benefit from entering a swap.
• E)There is no opportunity for comparative advantage here.

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Definitions:

Clear Decision

An unambiguous and definitive choice or determination made after considering all relevant factors and information.

Firm

Refers to a business or company, particularly one involved in professional services or consulting.

Golden Rule

A fundamental moral principle that advocates treating others as one would like to be treated oneself, often cited in various ethical, religious, and philosophical contexts.

Interact

The act of communicating or directly working with someone or something to exchange information or produce a response.