Where a Borrower of Foreign Currency Funds Hedges Its FX

question 93

True/False

Where a borrower of foreign currency funds hedges its FX risk with an FX swap, the borrower's effective interest rate will be the domestic interest rate.

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Definitions:

Ratification

The process of officially sanctioning a treaty or agreement to make it legally binding.

Adoption

The legal process by which an individual assumes the parenting of another, usually a child, from that person's biological or legal parent(s).

Unauthorized Contracts

Unauthorized contracts refer to agreements made by individuals who lack the legal authority or capacity to bind themselves or another party to contractual obligations.

Apparent Authority

A situation where a reasonable person would understand that an agent had authority to act, even if the agent did not have actual authority.