Jersey Co. borrowed Singapore dollars over a short-term period to finance its U. S. dollar payables because the Singapore interest rate was low. It incurred a negative effective financing rate on this short-term loan which indicates that Jersey Co.:
a. paid more interest on the loan than what it would have paid if it had borrowed U. S. dollars.
b. experienced a negative stock price reaction due to borrowing funds.
c. will need fewer U. S. dollars to repay the short-term loan than the amount of U. S. dollars that it was able to use as a result of the loan.
d. will be unable to repay the loan.
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Home » Business » Jersey Co. borrowed Singapore dollars over a short-term period to finance its U. S. dollar payables because the Singapore interest rate was low. It incurred a negative effective financing rate on this short-term loan which indicates that Jersey Co.