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PLEASE EXPLAIN IN DETAIL
3. Exchange Rate Effects
a.
Explain the difference in the cost of financing with foreign
currencies during a strong-dollar period versus a weak-dollar
period for a U.S. firm.
6. Financing That Reduces Exchange Rate Risk
Kerr, Inc., a major U.S. exporter of products to Japan,
denominates its exports in dollars and has no other international
business. It can borrow dollars at 9 percent to finance its
operations or borrow yen at 3 percent. If it borrows yen, it will
be exposed to exchange rate risk. How can Kerr borrow yen and
possibly reduce its economic exposure to exchange rate risk?

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