Exhibit 20-2
to Benefit from the Low Correlation Between the Canadian

question 22

Multiple Choice

Exhibit 20-2
To benefit from the low correlation between the Canadian dollar (C$) and the Japanese yen (¥) , Luzar Corporation decides to borrow 50% of funds needed in Canadian dollars and the remainder in yen. The domestic financing rate for a one-year loan is 7%. The Canadian one-year interest rate is 6% and the Japanese one-year interest rate is 10%. Luzar has determined the following possible percentage changes in the two individual currencies as follows:
$\begin{array}{lcc}\text { \underline{Cuntency} } & \text { \underline{Percentage Change }} & \text { \underline{Probability }} \\\text { Canadian dollar } & 2.0 \% & 30 \% \\\text { Canadian dollar } & 4.0 \% & 70 \% \\\text { Japanese yen } & -3.0\% & 60 \% \\\text { Japanese yen } & 1.0 \% & 40 \%\end{array}$
-Refer to Exhibit 20-2. What is the probability that the financing rate of the two-currency portfolio is less than the domestic financing rate?

• A)12%.
• B)30%.
• C)100%.
• D)0%.
• E)none of the above

---

Definitions:

Neuman's Systems Model

A comprehensive nursing theory that focuses on the responses of individuals to potential or actual environmental stressors through the use of several lines of defense.

Ego Defence Model

Psychological theories focusing on mechanisms used by the ego to protect itself from anxiety and unacceptable thoughts or perceptions.

Wellness Lecture

An educational session focusing on improving health and wellbeing through various practices, behaviors, and lifestyle choices.

PTSD

Post-traumatic stress disorder, a mental health condition triggered by experiencing or witnessing a terrifying event, characterized by flashbacks, nightmares, and severe anxiety.