Exhibit 20-2 To Benefit from the Low Correlation Between the Canadian Dollar

question 50

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:

-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

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Republicans residing in the Southern United States, historically significant for their role during the Reconstruction era and their political evolution over time.

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