Description
Summary: | The paper shows how-in a Merton-type model with bankruptcy-the currency composition of debt changes the risk profile of a company raising a given amount of financing, and thus affects the cost of debt. Foreign currency borrowing is cheaper when the exchange rate is positively correlated with the return on the company's assets, even if the company is not an exporter. Prudential regulations should therefore differentiate among loans depending on the extent to which borrowers have ""natural hedges"" of their foreign currency exposures
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Physical Description: | 1 online resource (20 pages) : color illustrations |
Format: | Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. |
Bibliography: | Includes bibliographical references (pages 18-20). |
ISBN: | 1462327524 9781462327522 1452719802 9781452719801 1451872577 9781451872576 9786612843259 661284325X 1282843257 9781282843257 |
Language: | English. |
Reproduction Note: | Electronic reproduction. |
Source of Description, Etc. Note: | Print version record. |
Action Note: | digitized |