Observe the fixed annual rates that two firms will pay for financing their $10million, 7-year projects...
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Observe the fixed annual rates that two firms will pay for financing their $10million, 7-year projects in US dollars (USD) and Australian dollars (AUD): Firm A B Fixed rate USD 5.0% 7.0% Fixed rate AUD 7.5% 8.0% Show an indirect swap in which A and B reduce their cost by the same percentage and without any exchange rate risk to A and B, while SD receives .5% but bears some exchange rate risk. Observe the fixed annual rates that two firms will pay for financing their $10million, 7-year projects in US dollars (USD) and Australian dollars (AUD): Firm A B Fixed rate USD 5.0% 7.0% Fixed rate AUD 7.5% 8.0% Show an indirect swap in which A and B reduce their cost by the same percentage and without any exchange rate risk to A and B, while SD receives .5% but bears some exchange rate risk.
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