1. In regards to the perspective of a U.S. investor, which of the below statements is FALSE?...
Question:
1. In regards to the perspective of a U.S. investor, which of the below statements is FALSE?
Group of answer choices
a.The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in that foreign currency.
b.The actual number of U.S. dollars that the investor eventually gets depends on the exchange rate between the U.S. dollar and the foreign currency at the time the nondollar cash flow is received and exchanged for U.S. dollars.
c.The cash flows of assets denominated in a foreign currency expose the investor to uncertainty as to the actual level of the cash flow measured in U.S. dollars.
d.If the foreign currency depreciates (declines in value) relative to the U.S. dollar (that is, the U.S. dollar appreciates), the dollar value of the cash flows will be proportionately less, leading to foreign exchange risk.
2. What would be the lowest fixed-rate borrowing cost available for an institution that can borrow at 12% fixed in one market, or at a variable rate equal to LIBOR+4.5% in another market, and there is an available swap of LIBOR+3% for a 10% fixed payment?
Fundamentals of Investing
ISBN: 978-0133075359
12th edition
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk