Using an FX Swap to Hedge a Foreign Currency Loan

question 23

Multiple Choice

Using an FX swap to hedge a foreign currency loan:

• A)locks-in the foreign interest rate as the effective cost of funds
• B)ensures that the domestic hedged amount will repay the foreign debt
• C)will always result in a better outcome than not hedging a foreign loan
• D)is motivated by the desire for protection from a foreign currency depreciation.
• E)All of these are correct.

---

Definitions:

Taboo Subject

Topics that are forbidden or considered too sensitive to be discussed openly in society or certain cultures.

Gatekeeper

An individual or entity that controls access to resources, information, or communication channels, thus influencing the flow of information and participation.

Intervenes

The act of becoming involved in a situation to alter the outcome or to assist in resolving issues or conflicts.

Logs

Records of events, transactions, or observations kept systematically for the purpose of tracking or analyzing information.