Which of the following is a major reason for firms to engage in currency swaps?
A)They will only be required to repay the interest.
B)They can obtain more favourable borrowing terms in a different currency.
C)The debt will not show on their balance sheets.
D)Borrowing in a foreign currency offers lucrative tax breaks.

Question

Quizplus · Accepted Answer

The major reason for firms to engage in currency swaps is to obtain more favourable borrowing terms in a different currency. This can be achieved by taking advantage of lower interest rates in another currency or by securing a currency that is more stable than their own domestic currency. By doing so, firms can reduce their borrowing costs and exposure to currency risk. None of the other answer choices accurately describe a major reason for firms to engage in currency swaps.

Which of the Following Is a Major Reason for Firms