Exhibit 20-3
Cameron Corporation Would Like to Simultaneously Borrow Japanese

question 6

Multiple Choice

Exhibit 20-3
Cameron Corporation would like to simultaneously borrow Japanese yen (¥) and Sudanese dinar (SDD) for a six-month period. Cameron would like to determine the expected financing rate and the variance of a portfolio consisting of 30% yen and 70% dinar. Cameron has gathered the following information:
$\begin{array}{c}\begin{array}{lll}\text {Mean effective financing rate of Japanese yen for six months}\\\text { Mean effective financing rate of Sudanese dinar for six months }\\\text {Standard deviation of Japanese yen's effective financing rate }\\\text {Standard deviation of Sudanese dinar's effective financing rat}\\\text { Correlation coefficient of effective financing rates of these two currencies} \end{array}\begin{array}{c}4 \% \\1 \% \\.10 \\.20 \\.23 \end{array}\end{array}$

-Refer to Exhibit 20-3. What is the expected financing rate of the portfolio contemplated by Cameron Corporation?

• A)3.10%.
• B)1.90%.
• C)17.00%.
• D)13.00%.
• E)none of the above

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Definitions:

Extreme Poverty

A condition characterized by the severe lack of access to basic human needs, such as food, safe drinking water, and shelter, often defined as living on less than $1.90 a day.

Basic Poverty

A condition where individuals or families lack the financial resources to meet the minimum standards of living, often defined by basic necessities such as food, clothing, and shelter.

Homelessness

A state of not having a permanent place to live, often resulting in living on the streets, in shelters, or in temporary accommodations.

Substance Abuse

An overindulgence in and dependence on a drug or other chemical leading to effects that are detrimental to the individual's physical and mental health, or the welfare of others.