1 discuss the assumption of the b-s opm and their, Ask an Expert

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1. Discuss the assumption of the B-S OPM and their applicability.

2. Compare and contrast the B-S OPM with the BOPM.

3. If interest rate parity holds between the US and a foreign country, transaction costs are zero, and the forward rate is an unbiased predictor of the future spot rate, then the effective financing rate for a US company that borrows the foreign currency on a covered basis would be:

A) Equal to the US interest rate

B) Less than the US interest rate

C) More than the US interest rate

D) Less than the US interest rate and if the forward rate exhibited a discount, and more than the US interest rate if it exhibited a premium

E) Equal to the foreign interest rate

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92759406

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