A borrower will prefer to issue a foreign denominated bond if:
A) the domestic interest rate is greater than the sum of the foreign interest rate and the annual expected change in the exchange rate.
B) the domestic interest rate is less than the sum of the foreign interest rate and the annual expected change in the exchange rate.
C) the domestic interest rate is equal to the sum of the foreign interest rate and the annual expected change in the exchange rate.
D) the foreign interest rate is greater than the sum of the domestic interest rate and the annual expected change in the exchange rate.
Correct Answer:
Verified
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