What is your quality spread differential

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Reference no: EM133429129

Question: As CEO of TX Instruments you are considering financing your Australian operations with debt. US 10-year treasuries are currently at 2.5% and Australian 10-year treasuries are at 5.0%. You can borrow at 4.25% domestically (175 bp over the US 10 year treasury) or at 7.25% (225 bp over the Australian treasury) in Australian dollars. Assume that there exists an Australian company that can borrow at 100 bp over the Australian treasury and at 125 bp over the US treasury. What is your Quality Spread Differential (QSD) in basis points?

Reference no: EM133429129

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