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Arrange a fully hedged loan in france

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Question: Assume that a Canadian firm needs to borrow $ 10,000 for I year. Interest rates for a 1 -year loan are 10 percent in Canada and 9 percent in France. Assume that the current exchange rate is Fr.4.70 = C$ 1, and that the 1 -year forward exchange rate is Fr.4.61 = C$I. Would it be cheaper to borrow in Canada, or to arrange a fully hedged loan in France?

Reference no: EM131750435

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