1. Suppose firm ABC has access to fixed rate 8%, and floating rate LIBOR + .5%, while XYZ had access to fixed rate 10% and floating rate LIBOR + 1.5%. For these two firms:
Only ABC has a comparative advantage in floating rates
Only XYZ has a comparative advantage in the floating rate
ABC has a comparative advantage in fixed while XYZ has a comparative advantage in floating rates
ABC has a comparative advantage in both fixed and floating rates
2. Consider a call option selling for $5 for which the exercise price is $40. What is the breakeven stock price for this call buyer with regard to profit at expiration?
$30
$35
$40
$45
$50