Question: Spectra Energy Corp. (based in Houston) has substantial operations in Canada, and generates much revenue in Canadian dollars. It borrows funds denominated in Canadian dollars

Spectra Energy Corp. (based in Houston) has substantial operations in Canada, and generates much revenue in Canadian dollars. It borrows funds denominated in Canadian dollars (rather than U.S. dollars) to finance its Canadian operations. Write a short essay that explains the potential benefits from such a strategy. Explain the possible disadvantages that might occur when some U.S.-based MNCs attempt this strategy in a country where interest rates are high. Also, consider the alternative solutions such as not hedging, or selling forward contracts?

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