The variance in financing costs over time is ____ for foreign financing than domestic financing. The variance when financing with foreign currencies is lower when those currencies exhibit ____ correlations, assuming the firm has no other business in those currencies.
A) lower; low
B) lower; high
C) higher; high
D) higher; low

Question

Quizplus · Accepted Answer

Foreign financing typically has higher variance due to exchange rate fluctuations. Lower correlations among currencies can increase variance, as they do not offset each other's movements.

The Variance in Financing Costs Over Time Is ____ for Foreign