CHAPTER 3: RATES OF RETURN

Because its assets are long-term fixed-rate mortgages, Yankee would prefer to be borrowing at a ten-year, fixed interest rate. If it borrowed on its own, Yankee would have to pay 12% per year. On the other hand, suppose Global Products, Inc. has good access to fixed-rate borrowing overseas. It can borrow for 10 years at a fixed rate of 11%. ................
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