Financing in Foreign Currency: It is expected that you apply concepts covered in Chapter 20 to your below answers.

Part B - review from previous assignment. Given that your business has receivables in a foreign currency, you may want to consider financing in that same foreign currency to offset the exposure.

1. Compare and discuss the recent interest rate of the foreign currency of concern (i.e. used for your project) to the U.S. interest rate.

Part C - review from previous assignment.

1. Is the foreign interest rate typically higher or lower than the U.S. interest rate?

2. Why do you think that is?

Part D - apply the concepts from Chapter 20:

1. Would you use financing in that currency to offset receivables?

2. Explain your rationale in detail.

Part E. Note: This section is where you will earn the majority of your points.

Explain how you could use foreign financing for your business in a manner that would reduce your exposure to exchange rate risk. Be specific.