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We analyze the profitability of FX swaps used by the central bank of Brazil to shed light on the rationale for FX …
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This paper investigates the effects of permanent and transitory components of the exchange rate on firms' profitability …
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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...
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