A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if U.S. dollar appreciates against the Chinese currency.

Name: A Chinese firm borrows 1 million U.S. dollars from an American bank. The cost of this loan will be less if U.S. dollar appreciates against the Chinese currency.
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Question

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Movements in foreign exchange rates can substantially increase the cost of foreign currency loans. In this case, the value of the loan increases as U.S. dollar appreciates.

A Chinese Firm Borrows 1 Million U