Question Details

How can a U.S. firm finance in euros 



1. Probability Distribution.
a. Discuss the development of a probability distribution of effective financing rates when
financing in a foreign currency. How is this distribution developed?

b. Once the probability distribution of effective financing rates from financing in a foreign
currency is developed, how can this distribution be used in deciding whether to finance in the
foreign currency or the home currency?

2. Financing and Exchange Rate Risk. How can a U.S. firm finance in euros and not necessarily be
exposed to exchange rate risk?



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