Which of the Following Statements Is FALSE

question 84

Multiple Choice

Which of the following statements is FALSE?

• A) Differential access to national capital markets is common enough that it provides the best explanation for the existence of currency swaps, which are like the interest rate swap contracts, but with the holder receiving coupons in one currency and paying coupons denominated in a different currency.
• B) Currency swaps generally also have final face value payments, also in different currencies.
• C) 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.
• D) With differential access to national markets, to maximize 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).

---

Definitions:

Target

An object or goal that one aims to reach or achieve, often used in the context of objectives, benchmarks, or physical marks aimed at in shooting or throwing.

Signal-Detection Analysis

A statistical method used to determine the ability to differentiate between information-bearing patterns and random patterns that distract from the information.

Sensitive

Sensitive refers to the ability to perceive or feel things deeply or to respond quickly to stimuli, often associated with acute physical or emotional sensitivity.

Signal

A form of communication or indicator that carries information or instructions, often causing a response in the receiver.