Question: Please define Basis Risk, and give a real-world example Please explain in words, and show using boxes & arrows how a cross currency swap would

  1. Please define Basis Risk, and give a real-world example
  2. Please explain in words, and show using boxes & arrows how a cross currency swap would work using the following details
  3. US Borrower: XOM borrowing 5B at an interest rate of 5%
  4. UK Borrower: BP borrowing $3B at an interest rate of 4%

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