Firm A is a U. S. MNC and wants to borrow €40 million for 3 years. Firm B is a French MNC and wants to borrow $60 million for 3 years. Firm A wants finance euro denominated asset in Italy and therefore wants to borrow euro. Firm B wants to finance a dollar denominated asset and therefore wants to borrow dollars. Firm A can borrow dollar at 7% or borrow euro at 6%. Firm B can borrow dollar at 8% or borrow euro at 5%. The current exchange rate is $1.50 = €1.00. If firms A and B knew and trusted each other, they could theoretically cut out the swap bank.

Financial performance is measured in many ways. requirements 1. explain the difference between lag and lead indicators. 2. the following is a list of financial measures. indicate whether each is a lag or lead indicator: a. income statement shows net income of $100,000 b. listing of next week's orders of $50,000 c. trend showing that average hits on the redesigned website are increasing at 5% per week d. price sheet from vendor reflecting that cost per pound of sugar for the next month is $2 e. contract signed last month with large retail store that guarantees a minimum shelf space for grandpa's overloaded chocolate cookies for the next year