- 10 Marks
AFM – Nov 2018 – L3 – Q5a – The role of the treasury function in multinationals
Determine whether GCB should borrow locally or through a portfolio of foreign currencies based on borrowing rates and expected currency changes.
Question
The Ghana Cocoa Board (GCB) is contemplating borrowing one-year funds in anticipation of the coming cocoa season, which starts in September/October 2017. GCB can borrow from the local financial market in Ghana or borrow a portfolio of funds made up of UK pounds and Euros. The information below is the borrowing rates and the probabilities of expected strengthening of the international currencies vis-à-vis the cedi.
Required:
Determine whether GCB should borrow from the local financial market or borrow a portfolio of funds made up of UK pounds and Euros.
Find Related Questions by Tags, levels, etc.
- Tags: Borrowing Rates, Currency Exchange, Financial management, Interest rates, Money market
- Level: Level 3
- Topic: The role of the treasury function in multinationals
- Series: NOV 2018
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