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1. Expain the what are ADRs and its advantages. 2. Explain the international currency swaps...

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1. Expain the what are ADRs and its advantages. 2. Explain the international currency swaps in detail providing an example. Please solve the following questions: 3. B AAA 11.2% Y BB 12.5% Fitch's credit rating Fixed-rate borrowing cost Floating-rate borrowing LIBOR LIBOR-0.5 cost a. Calculate the quality spread differential (QSD). b. Develop an interest rate swap in which both B and Y have an equal cost savings in their borrowing costs. Assume B desires floating-rate debt and Y desires fixed-rate debt. No swap bank is involved in this transaction. c. Do problem 1 over again, this time assuming more realistically that a swap bank is involved as an intermediary. Assume the swap bank is quoting five- year dollar interest rate swaps at 11.5% - 11.7% against LIBOR flat

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