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what is the comparative advantage argument for currency swaps? how does the argument differ for interest...
The comparative advantage argument is often used to explain the benefits of swaps. In the Excel file, you will find the cost of fixed rate and floating rate for two companies that do not have the same credit quality. AAA company wants to borrow at floating rate, while the BBB company wants to borrow at fixed rates. a) Calculate the total gain (in terms of interest rates) that the two companies can achieve by entering into a swap between them....
Explain Interest rate swaps versus currency swaps? explain elaborately
3 question (30%). Swap Comparative Advantage for Currency Swaps Given Mitsukoshi wants to borrow USD Tiffany & Co wants to borrow Yen USD 5.50% 6.75% Yen 4.75% 3.25% Tiffany & Co Mitsukoshi Ltd Required: a. Design a swap that will net a bank, acting as intermediary 0,1% (10 basis points) per annum. b. Make the swap equally attractive to the two companies and ensure that all foreign exchange rate is assumed by the ban Dr.oec. Andrejs Čirjevskis, profesors 09.01.2019
3 question (30%). Swap Comparative Advantage for Currency Swaps Given: Mitsukoshi wants to borrow USD Tiffany & Co wants to borrow Yen Tiffany &Co Mitsukoshi Ltd USD 5.50% 6.75% Yen 4.75% 3.25% Required: Design a swap that will net a bank, acting as intermediary , 1% (10 basis points) per annun. Make the swap equally attractive to the two companies and ensure that all foreign exchange rate is assumed by the ban a. b. Dr.oec. Andrejs Čirjevskis, profesors 09.01.2019
How do the theories of absolute advantage and comparative advantage differ? During which centuries were this two theories developed and by whom?
Who uses interest and currency swaps? In what way the use of these instruments help the using companies?
Another explanation for U.S. dollar dominance, is the argument that the U.S. has a comparative advantage in financial assets and investment opportunities, of which the U.S. dollar is but one example. Using any of the trade models we have discussed in class, explain how the U.S. might have a comparative advantage in financial assets and investment opportunities.
What does the term "absolute advantage" mean? What is the “principle of comparative advantage”? Explain why the principle of comparative advantage is relevant to international trade policy. Is everyone better off when trading is allowed?
question/ The economic argument supporting free trade is based on the principle of: absolute advantage comparative advantage. protection tariffs and quotas.
How does a weak currency give a country an unfair advantage in trade? Multiple Choice A weak currency implies low translation costs. A weak currency allows citizens to consume more imports. A weak currency is associated with strong trade policy. A weak currency makes a country’s imports more attractive. A weak currency boosts exports sales for the country.