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Sumitomo Bank Wants to Expand Its Lending in the United

Question 32

Multiple Choice

Sumitomo Bank wants to expand its lending in the United States,but to do so it needs to raise more long-term debt capital to help finance these loans.Currently,long-term interest rates are 9.5% in the U.S.and 6.3% in Japan.What would you recommend Sumitomo do?


A) raise yen in Japan because of the lower cost of money
B) raise yen in Japan because Japanese investors are more patient than U.S.investors
C) raise dollars in the U.S.to hedge against currency risk
D) raise dollars in the U.S.to avoid depressing Tokyo stocks

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