Law Essay Example About UK Trademarks and Intellectual Property - Free Essay Example

Sample details Pages: 5 Words: 1549 Downloads: 7 Date added: 2017/06/26 Category Law Essay Type Case study Did you like this example? Part A In the UK, trademarks are filed and protected on a first-come first-served basis. In this case, therefore, the Canadian All Reds have registered a trademark in the UK and this will take priority over the attempt by Preston Rugby Union Club (PRU). Therefore, when PRU go to register the name ‘Lancashire All Reds, the Canadian All Reds could object to the registration. Don’t waste time! Our writers will create an original "Law Essay Example About UK Trademarks and Intellectual Property" essay for you Create order There are several grounds upon which they could object to the registration; these objections would have to be lodged at the Company Names Tribunal which is a department within the UK Intellectual Property Office. In order to make an objection, it will be necessary for the Canadian All Reds to show that the name is the same as their name and that they have built up a degree of goodwill or reputation with the name. The name does not have to be exactly the same; however, it does have to be so similar that it is likely to mislead individuals into believing that the two are linked. One of the factors that have been established when objecting to a trademark registration is that ‘a genuine, properly substantiated likelihood of confusion exists. The case of Royal Berkshire Polo Club stated that, in order for an objection to be successful, it is absolutely essential that there is this element of confusion. In this case, the Royal Berkshire Polo Club attempted to register a trademark that was objected to by the Polo Ralph Lauren Company by virtue of section 5(2) of the Trade Marks Act 1994, stating that it believed the mark was similar to identical goods. This would be the same objection that the Canadian All Reds would bring, due to the fact that they are similar products and that confusion is likely . It was also argued by Ralph Lauren that they had built up a substantial amount of goodwill and as the Canadian All Reds have been in operation for over a century and gained considerable success in this time, it is likely that this argument could also be used by the Canadian All Reds. It was held, in this case, that it was necessary to consider what a reasonable consumer would think and whether confusion would be reasonably likely. Based on this, it will be necessary for the Canadian All Reds to argue that allowing the name ‘Lancashire All Reds (particularly given their nickname ‘All Reds) would confuse consumers. As the Canadian All Reds trademark is registered in the UK and the Lancashire All Reds are also attempting to register in the UK, there is a definite overlap of jurisdiction. Moreover, it is also highly likely that there would be some confusion due to the fact that both organisations operate substantially in the same market place, i.e. in rugby. Based on this and combined with the fact substantial goodwill has been built up in the name ‘Canadian All Reds, it would seem likely that they would be able to object, successfully, to this trademark registration. Part B One of the first issues that the Canadian All Reds will have to consider is whether or not they actually own the intellectual property rights to the logo. The logo was designed by an independent designer employed by the Canadian All Reds. In these circumstances, it would be normal for the contract between the designer and the Canadian All Reds to ensure that any intellectual property rights stemming from the relationship are vested in the Canadian All Reds; this needs to be checked, before the Canadian All Reds could bring any action. The logo is not registered and therefore the action open to the Canadian All Reds would be either passing off or design right infringement . Design rights protect the unique shape or design of a product and not the two dimensional shape. For example, in this case, the actual design of the scarves could be protected and the Canadian All Reds could bring an action against John in relation to the scarves, alongside any action being brought in relation to the logo itself. Design rights are not registered; they are automatically vested in a new design when it is recorded in material form. The Canadian All Reds, therefore, need to ensure that the design right in the merchandise is vested in them, before they become available to the public. This will be the evidence required in order to ensure that an action against John is possible. It should be noted that design rights only exist in the UK and although international recognition is possible, it is not offered as standard. Clothing is capable of gaining design right protection as held in the unreported case of Jo-Y-Jo Ltd v Matalan, in 1999, where knitted vests were held to have design right protection. Alternatively, the Canadian All Reds could bring an action for passing off as defined in Reckitt Colman Ltd v Borden Inc , which they would be able to bring if they could prove that they have built up goodwill in their logo and that the logo of PRU was established and could be a misrepresentation which would confuse consumers. Finally, the Canadian All Reds would have to prove that they had suffered loss as a result. In this case, it may be difficult to prove that the loss has actually occurred, unless the Canadian All Reds could show that individuals were purchasing items from PRU instead of themselves, by accident, which is unlikely for rugby union fans who would understand the differences between the two teams. Part C In this case, the Canadian All Reds would have to rely on the law of passing off in order to prevent John from selling the scarves outside the grounds. It does not confer an exclusive right on the owner; it is a protection from misrepresentation. In order to prove the case for passing off, it would be necessary for the Canadian All Reds to show that they had goodwill in the mark, which they do have, and that there had been some form of misrepresentation and that this had damaged their goodwill . It would be up to the Canadian All Reds to show that they did have goodwill in the goods and the logo; they would also have to prove that there had been some form of false representation, whether it was intentional or not, to the public, by virtue of the goods being offered by John. For this to be the case, it will be necessary for them to show that there is a likelihood that the public would be deceived, but it has been established that the standard is not that of a ‘moron in a hurry , but rather the public at large . The court will determine whether or not there is a similarity in terms of the goods . This may result in a difference of opinion in terms of whether or not the scarves without the words ‘All Reds on them would be deemed passing off, in comparison to the ones without the words on the scarves. When considering all factors including the look of the scarves, it is more likely that the court will deem the scarves with the words ‘All Reds written on them to be more deceptive than the plain scarves. A similar case was seen in Arsenal Football Club v Matthew Reed . In this case, Mr Reed was selling unofficial merchandise such as scarves and hats that included marks similar to those of the Arsenal crest and logo. Arsenal brought an action for trademark infringement against Mr Reed, but Mr Reed argued that he was not using the mark as a trademark and was using it, rather, as merchandising, despite the fact that it was accepted that the custome rs did not necessarily think that the goods had come from the club, but rather that is was a ‘badge of support, loyalty or affiliation. It was held, in this case, that it could be a trademark infringement where the use of the mark undermined the essential function of a trademark and that by allowing the merchandise to be sold, it would mean that the function of a trademark was a way of identifying origin. The judge stated: ‘As the ECJ pointed out, the actions of Mr Reed meant that goods not coming from Arsenal but bearing the trademarks, were in circulation. That affected the ability of the trademarks to guarantee the origin of the goods. Based on this, it is expected that the Canadian All Reds could rely on this case to prevent John from selling the merchandise. Bibliography Bainbridge, David I., Intellectual Property, Pearson Education, 2006 Bogusz, Barbara, Cygan, Adam Jan Szyszczak, Erika M., The Regulation of Sport in the European Union, Edward Elgar Publishing, 2007 Bosworth, Derek L. Webster, Elizabeth, The Management of Intellectual Property, Edward Elgar Publishing, 2006 Colston, Catherine Middleton, Kirsty, Modern Intellectual Property Law, Routledge Cavendish, 2005 MacQueen, Hector L., Waelde, Charlotte Laurie, Graeme T., Contemporary Intellectual Property: Law and Policy, Oxford University Press, 2007 Michaels. Amanda Norris, Andrew, A Practical Guide to Trade Mark Law, Sweet Maxwell, 2002 Phillips, Jeremy, Trade Marks at the Limit, Edward Elgar Publishing, 2006 Spinello, Richard A., Intellectual property rights, Library Hi Tech, 25, 1. 2007 Vaver, D., Intellectual Property Rights: Critical Concepts in Law, Taylor Francis, 2006 Wadlow, Christopher, The Law of Passing-Off, 3rd revised ed., 2005

American Society on the CHange during the Post- World War...

American Society on the Change during the Post-World War Years After World War II, Americans experienced a time of rapid social change. American soldiers were discharged and returned home from the battlefields, hoping to find work and to get on with their lives. Marriage rate increased dramatically after the war. North American population experienced what is known as the â€Å"Baby boom† – an 18-year period of rapid population growth from 1946 to 1964. During this period, many children were born than in the same period before or after. During the post war years, the United States embarked on one of its greatest periods of economic expansion. Many Americans had enjoyed economic prosperity. However, the United States has changed since 1950.†¦show more content†¦These includes changes in social levels over time, death rates, economic conditions and laws –the no-fault divorce laws, the reduction in fertility and the legalization of abortion increased the divorce rates in the 1980s. However, scholars believe that the sin gle most important social change which made divorce possible was the increase in the employment of women and the economic independence that employment provided. For nearly all decades, the lifetime probability of divorce for women of all ages has been increasing. For women born in 1920, the likelihood of divorce by age 55 was 27 percent. This same level of divorce was reached at a much younger age (age 30) for women born in 1950. At least 40 percent of young adult women are likely to divorce. 16 percent are likely to divorce twice if current divorce rates continue. In Document 1, in the 1990s and 2000s, divorce rates appear to decline slightly. In the meantime, suburban population was growing and shifting during the post war years. Baby boomers brought much prosperity as they grew up and entered the work force. With so many people working and making a better living, growing families needed more room. 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Diabetic Ketoacidosis and Cerebral Oedema-Free-Samples for Students

Question: Discuss about the Diabetic Ketoacidosis (DKA) and Cerebral Oedema. Answer: Introduction Diabetic ketoacidosis is caused as a result of reduced effective circulating insulin in blood. The condition usually arise among patients with type I diabetes mellitus, associated with a genetic defect in the insulin producing tissue, i.e. islets of langerhans in the pancreas tissue (Kumar Manjusha 2017). The situation leads to the activation of hormones that alleviate glucose production, followed by increased lyiposysis and ketone body production, which causes the metabolic acidosis and hyperglycemia along with dehydration and loss of electrolytes (Usher-Smith et al., 2012). Thus, it is important to maintain the fluid balance among the patients experiencing DKA. In paediatric care, DKA is one of the significant areas of concern. One of the key dangerous complications related to DKA that leads to fatal consequences is the cerebral oedema, which has been estimated to be the cause of 70 to 80 % deaths of under 12 years old children, experiencing DKA (Usher-Smith et al., 2011). Childre n with type I diabetes are risk prone to develop dangerous consequences of DKA, significantly due to late diagnosis, late referral and late initiation of treatment. Thus, a high index of suspicion is required for diagnosing DKA during initial assessment (Kumar Manjusha 2017). It has also been estimated that the majority of the cerebral oedema cases leads fatal consequences, with a mortality rate of 25 % to 30 %, whereas 35% to 40 % patients survives with severe neurological defects. As the DKA is associated with significant amount of fluid and electrolyte loss, the treatment procedure is related to the maintenance of fluid balance through the IV fluid supplement. It has been estimated that within the overall cases of DKA, up to 1 % children develop cerebral oedema as a complication DKA (Savage et al., 2011). The recent statistics showed that in UK and US, a prevalence of 0.5 to 1.5 % DKA cases include cerebral oedema, which constitutes 90 % mortality related to DKA (Yaneva, Konstantinova Iliev, 2016). Whereas, dependence between the CO development and the initiation of DKA treatment, high fluid volume, delayed potassium substitution, hyperglycemia, low serum phosphate are the signs of cerebral oedema. In spite of providing a significant effort to reduce the risk of cerebral oedema related to DKA, the mortality rate has remained constant through past decades. Although several studies have been performed to identify methods to treat CO, no such strong methods have been found, rather a need for a lager trial has been found for finding appropriate therapeutic recommendations (Brown, 2004). For instance, Hsia et al., (2015) revealed that reducing the intended fluid rate during initial 24 hours to 2500 mL/m2/d and increasing the IBV fluid sodium content have no effect upon reducing the incide nt of adverse outcomes like CO among children, making fluid balance therapy questionable for CO. It has been evident that this fluid rebuilt process has a significant contribution in developing cerebral oedema. Thus, while deciding the treatment for DKA patient, this factor should be kept in mind. While managing DKA in children, several unique aspects must be considered. Thus, paediatric care facilities need to develop goals and care plans for each child, based on the childs condition and the evidences from the previous successful cases. In this assignment, the pathophysiology and clinical manifestation of DKA and cerebral oedema would be demonstrated, along with the demonstration of best strategies for treating children with DKA (Fritsch et al., 2011). The selection of the most appropriate treatment strategy would be identified through evidence based procedure. Pathophysiology and clinical manifestations of DKA and cerebral oedema The diabetic ketoacidosis or DKA is a complex metabolic disorder. The diabetic ketoacidosis is related to other severe and chronic disorder. The disorder is significantly a secondary complication of the chronic disease diabetes mellitus. It is typically diagnosed with the vital signs of low blood pH, high blood sugar level and presence of ketoacidis in either blood or urine (Seewi et al., 2010). The complications related to the disease are due to shortage of insulin, as a result of which body starts burning fatty acids, thereby producing acidic ketone bodies. As a result of insulin deficiency, the level of glucagon is increased, causing the release of glucose by liver via the process of gluconiogenesis or glycogeenesis (Lamb, 2014). This high level of glucose spills over the urine along with water and minerals, causing osmotic dieresis. It causes the development of symptoms like polyuria, dehydration and polydipsia. Ketoacidosis is referred to an extension of normal physiological mechanisms, compensating for starvation. For instance, in the fasting state, the changes in body metabolism changes from carbohydrate oxidation to fat oxidation. The ketoacids are formed from the free fatty acids which are produced in adipocytes and transported to the liver via albumins. In liver, these fatty acids are broken down and produce ketoacids. These newly produced ketoacids are then exported to the peripheral tissues from liver, i.e. brain and muscles. At these tissues, these ketoacids are oxidised by the process of beta oxidation (Gosmanov, Gosmanova Dillard-Cannon, 2014). It is because; the beta-hydroxybutarate can serve as energy resource, when the insulin mediated glucose delivery system is not available. This procedure is recognized as a protective method during the starvation phase. At the time of ketosis, a small amount of acetone is produced, which causes the breath of the DKA patients a fruity smell (Wolfsdorf et al., 2014). As a result of the formation of ketone bodies, which have a low pKa, the blood becomes acidic as its pH lowers. However, initially, the buffering occurs through the bicarbonate buffering system. However, the system is not able to maintain the balance for longer time and it overwhelms, as no other system is supporting it (Cameron et al., 2014). In patients with diabetes mellitus, insulin resistance cannot meet the insulin demand rise blood sugar level rises along with dehydration and resistance to insulin increases further through vicious circle. As a result, an adult patient with DKA has a water shortage of 6 litres along with the deceased amount of key minerals like sodium, potassium, calcium, chloride, magnesium and phosphate (Mahler et al., 2011). In the patients with type I diabetes mellitus, DKA is a secondary complication of complete lack of insulin production by the pancreas tissues, islets of langerhans. On the other hand, in type 2 diabetes, insulin resistance occurs as a result of insufficient production of insulin. However, in type 2 diabetes, DKA is not common, as the amount of insulin that is produced in this disorder is usually sufficient for patients to suppress ketogenesis (Edge, 2015). However, ketosis-prone type 2 diabetes is referred to the cases when DKA occurs in patients with type 2 diabetes. Thus, up on treatment, if the normal insulin secretion resumes, the patient may have better results. Moreover, DKA is associated with the secretion of several counter-regulatory hormones in glucagon and adrenaline as well as cytokines, which ultimately causes inflammation (Glaser et al., 2013). Cerebral oedema is another serious complications associated with DKA, which is the most dangerous consequences of DKA. It is associated with several critical factors. It is most likely to be developed among people, who are suffering from severe DKA. It is often argued that the condition is associated with over vigorous rehydration (Glaser et al., 2013). The factors contributing in the development of cerebral oedema are acidosis, low carbon dioxide, dehydration, increased inflammation and coagulation; these factors collaboratively reduces the blood flow to some particular parts of the brain, causing the swelling of brain tissue upon starting the fluid replacement treatment (Foster, Morrison Fraser, 2011). The tissue swelling in brain causes the raised intracranial pressure, which ultimately leads to fatal consequences. Therefore, the treatment procedure has a significant contribution upon the development of this serious complication among patients. As DKA is a secondary complication to the diabetic patients, the early signs and clinical manifestations are often not properly diagnosed. However, development of DKA is a slow process, although symptoms can be alleviated by several means. The initial clinical features of DKA are often mistaken with the normal symptoms of diabetes mellitus. The clinical representation of the condition can vary with the severity and comorbid conditions (Edge, 2015). Sometimes, the disease symptoms are progressed over 1 day or less than that, which include the signs and symptoms of polyuria and polydipsia, which are the most common symptoms of the disease. Besides these signs, vomiting, fatigue, flushing of skin, dry skin, thirst, dyspnea, losing weight, polyphagia, abdominal pain, preceding febrile illness, tachycardia, hypotension, frequent urination, high blood sugar level and presence of ketones in urine are common. Kussmaul respiration is a compensatory symptom of metabolic acidosis. In severe cas e, shock, oliguria and anuria are developed (Seewi et al., 2010). Patients in severe cases may experience drowsiness, confusion, progressive obtundation to loss of consciousness and coma. These signs are mainly arise as a result of the effect of the disorder upon brain, i.e. cerebral oedema. Finally, the inflammation in brain can lead to fatal consequences. Critical care treatment of patient with DKA in paediatrics There are several ways through which children with DKA are treated. It is important to follow particular protocol for paediatric patients, based on the hospitals care protocol. In this context, maintaining fluid balance is the key concern because, in DKA patients excessive fluid loss causes severe complications, whereas patients with severe cases, i.e. cerebral oedema, it is important to eliminate the risk of excessive fluid build up in the patients body. The key therapy requirements are IV fluid therapy, insulin administration for keeping the adequate level of glucose in the body, as glucose level decreases with IV supplementation (Seewi et al., 2010). Continuous monitoring is required for eliminating the risk of developing cerebral oedema. It is crucial for children to monitor the neurological status continuously, for keeping the vital signs, i.e. blood glucose level, blood pressure, respiratory rate, breathing issue and fluid content under control, which would help to reduce the p rogress of the disease towards the severe complications like cerebral oedema (Fritsch et al., 2011). The most important strategy for DKA and cerebral oedema is fluid balance therapy. However, based on the hospital policy and national guidelines, the treatment should follow a common guideline. For instance, immediate assessment of the patient, resuscitation for shock, diagnosis of DKA, IV therapy to combat with dehydration, insulin therapy, monitoring, management of other symptoms and management of cerebral oedema. However, based on the patients condition, mild non IV DKA therapy is also administered (Savage et al., 2011). However, it should be kept in mind that large amount of fluid can be harmful for paediatric DKA. Initial/emergency assessment- The clinical history of polyuria, polydispia, weight loss, abdominal pain, vomiting, tiredness, confusion, dehydration, fruity smell breathing, kussmaul breathing, ketone bodies in urine, elevated blood glucose, low electrolyte level are assessed and reported. Based on this assessment, when DKA is confirmed, three lines of therapy are recommended (Usher-Smith et al., 2011). During initial assessment, the baseline acidosis and abnormalities in sodium potassium and urea concentrations were critical risk indicators related to cerebral oedema. In addition, early administration of insulin along with high volumes of fluid is also key risk factors for cerebral oedema among children with DKA. Thus, these observations would be taken into consideration during the treatment protocol designing (Edge et al., 2006). Resuscitation- If the patient undergone shock, reduced peripheral pulses, reduced conscious level or undergoing coma, resuscitation is done for reviving the patient. At that time, the nasogastric tube is inserted and in severe shock, the patient should be administered with 100 % oxygen through face mask. When emergency fluids are necessary, isotonic fluid, like 0.9 % sodium chloride 10ml/kg over 20 to 30 minutes should be administered (Foster, Morrison Fraser, 2011). If the patient is still hypotensive, further fluid administration would be needed. Mild DKA- In mild cases, when the dehydration is less than 5 % and no sign of vomiting is observed, IV fluid or repeat electrolytes are not provided; rather treated with subcutaneous insulin from the beginning. Moderate DKA- If the patient is vomiting, but not in shock, the fluid requirement is calculated over 48 hours, 0.9 % saline is administered, whereas ECG for elevated T-waves are assessed; if there is no changes, KCl in 40 mmol/L is started. The low dose continuous insulin infusion at the rate of 0.1 unit/kg/hour is continued (Seewi et al., 2010). Here, the patient should be monitored critically, which should include hourly assessment of blood glucose level, fluid intake and output, neurological status, electrolyte therapy per 2 hours after IV therapy along with monitoring ECG for changes in T-wave elevation. If the blood glucose level falls to 15 mmol/l or 5mmol/hour, IV fluid therapy is started. It should be done upon the accurate assessment of volume deficit (Seewi et al., 2010). For first 12 hours 0.9 % sodium chloride is continued and during the reduced blood glucose level, 50g glucose is added to per 1000 mL saline. However, if the blood glucose level falls further, with 0.9 % s odium chloride, 7.5 % or 10 % glucose is added and maintained. If the patient is hypokalemic, the potassium replacement therapy should be started, whereas if the patient is hyperkalemic or anuric, potassium replacement should be ceased. Contentious monitoring is required for measuring the level of potassium retention. If the patient is clinically well and tolerating oral fluids, the patient therapy should be transmitted to SC insulin, i.e. SC insulin is started as per protocol, while ceasing IV insulin after 30 minutes (Glaser et al., 2013). Insulin therapy- After initial diagnosis with DKA, if the patient is clinically is successfully tolerating fluid through oral routes, SC insulin therapy is started. For instance, the SC insulin therapy is started, along with oral hydration. However, if no improvement is documented and neurological deterioration is observed through the representation of warning signs like slow heart rate, headache, decreased conscious level, incontinence and hypoglycaemia; assessment for cerebral oedema is done (Wolfsdorf et al., 2014). Management of cerebral oedema- cerebral oedema is a critical consequence of DKA, in which the fluid overload leads to inflammation in brain, hampering its function. At that time, patient should be managed with high precautions. If the patient is in fluid therapy, it should be reduced or ceased slowly, to maintain the fluid balance. The patient should be moved to ICU, followed by cranial imaging, once the patient is stable. Immediately after transferring the patient in ICU, patients head should be raised to 30 degree with the bed; oxygen should be administered immediately via mask (Cameron et al., 2014). Initially, the patient is administered with 0.5-1 g/kg mannitol through intravenous route over 20 minutes; if the patients condition is not improved, mannitol is repeated after 30 minutes. Consulting with a paediatric endocrinologist, 3 % NaCl may be administered. If needed, patient should be intubated; but aggressive ventilation should not be performed, as it is associated with poor outcomes in previous studies (Cameron et al., 2014). Patient education- Another important strategy is patient education. It has been revealed poor adherence with the therapies, follow ups, poor dietary guidelines and poor lifestyle management skills of the family. In this context, health promotional sessions are important for mild and moderate DKA patients and their parents. For instance, the pros and cons of the therapy, appropriate dietary guidelines for the child, the complications or risk factors of poor adherence with the treatment procedure are crucial factors for the parents and patients to understand (Foster, Morrison Fraser, 2011). Several literatures found that ongoing patient education has improved the management and adherence of the patients with the therapeutic procedures and follow up procedures. Best treatment strategies The most important strategy for DKA and cerebral oedema is fluid balance therapy. However, according to the Hospital policy, there is no best strategy to reduce the effect of the DKA and cerebral oedema. On the basis of the condition of the patient, the strategy can be applied to the patient. However, fluid balance therapy can be applied to the patients in a particular dose. As the retention of fluid decrease in the body, it is necessary to maintain the fluid balance in the body so that the patient can lead a healthy lifestyle. For instance, immediate assessment of the patient, resuscitation for shock, diagnosis of DKA, IV therapy to combat with dehydration, insulin therapy, monitoring, management of other symptoms and management of cerebral oedema (Edge, 2015). However, most of the patient continues to practice the therapy even after the recovery. Hence, this type of practice needs to be reduced. If the fluid amount increases in the brain, the patient may face vital issues that are related to the brain. As a result, the patient may die due to the cerebral oedema. Hence, before applying the fluid balance therapy, the nurses need to remember the consequences of the therapy. To reduce the dehydration, fluid balance therapy is beneficial. The patients who are in shock, fluid balance therapy is not appropriate for them. Hence, in such cases, the fluid balance therapy should not be used. Instead of the fluid balance therapy, insulin therapy can be used (Glaser et al., 2013). The patients need to take the medication on time so that the side effects of the therapy can be reduced. The nurses need to follow the hospital protocols so that the ethical issues regarding the therapies can be avoided. It should be kept in mind that large amount of fluid can be harmful for paediatric DKA. The nurses need to monitor the patients on the regular basis so that they can keep the record of the patient. It is the duty of the nurses that they should monitor the patient for example, the development or deterioration condition of the patient. If any noticeable changes are seen, they need to report to the responsible person so that the necessary actions can be taken (Gosmanov, Gosmanova Dillard-Cannon, 2014). However, it is crucial for children to monitor the neurological status continuously, for keeping the vital signs, i.e. blood glucose level, blood pressure, respiratory rate, breathing issue and fluid content under control, which would help to reduce the progress of the disease towards the severe complications like cerebral oedema. For instance, immediate assessment of the p atient, resuscitation for shock, diagnosis of DKA, IV therapy to combat with dehydration, insulin therapy, monitoring, management of other symptoms and management of cerebral oedema (Glaser et al., 2013). Patients in severe cases may experience drowsiness, confusion, progressive obtundation to loss of consciousness and coma. Based on this assessment, when DKA is confirmed, three lines of therapy are recommended. Hence, the patient should be monitored critically. Conclusion DKA is a significant cause of paediatric mortality and morbidity. However, appropriate management and continuous monitoring can lead to improved health outcomes of the patients. The management and therapeutic procedures of DKA is different from the therapeutic processes of adults. Thus, the nursing staffs and the paediatric care facilities need to be more careful and skilled, while dealing with children with DKA. One of the serious complications related to poorly managed DKA in children is cerebral oedema, which can lead to fatal consequences in several cases. In paediatric care services the DKA have significant negative impact as a result of high rate of mortality and morbidity. Although the condition can be managed with proper guidelines and follow up care, fluid therapy and insulin administration should be carefully monitored throughout the process. On the other hand, fluid therapy, if not monitored and balanced properly, can lead to severe complications, i.e. cerebral oedema. For this enough control of fluid intake and output are required. This assignment provided in depth demonstration of pathophysiology and clinical manifestation of DKA and cerebral oedema, followed by the analysis of the treatment strategies for DKA and cerebral oedema. Reerence List A Edge, J. (2015).BSPED Recommended Guideline for the Management of Children and Young People under the age of 18 years with Diabetic Ketoacidosis 2015.bsped.org.uk. Retrieved 5 August 2017, from https://www.bsped.org.uk/clinical/docs/DKAguideline.pdf Brown, T. B. (2004). Cerebral oedema in childhood diabetic ketoacidosis: is treatment a factor?.Emergency medicine journal,21(2), 141-144. Cameron, F. J., Scratch, S. E., Nadebaum, C., Northam, E. A., Koves, I., Jennings, J., ... Inder, T. E. (2014). Neurological consequences of diabetic ketoacidosis at initial presentation of type 1 diabetes in a prospective cohort study of children.Diabetes care,37(6), 1554-1562. Edge, J. A., Jakes, R. W., Roy, Y., Hawkins, M., Winter, D., Ford-Adams, M. E., ... Dunger, D. B. (2006). The UK casecontrol study of cerebral oedema complicating diabetic ketoacidosis in children.Diabetologia,49(9), 2002-2009. Foster, J. R., Morrison, G., Fraser, D. D. (2011). Diabetic ketoacidosis-associated stroke in children and youth.Stroke research and treatment,2011. Fritsch, M., Rosenbauer, J., Schober, E., Neu, A., Placzek, K., Holl, R. W. (2011). Predictors of diabetic ketoacidosis in children and adolescents with type 1 diabetes. Experience from a large multicentre database.Pediatric diabetes,12(4pt1), 307-312. Glaser, N. S., Ghetti, S., Casper, T. C., Dean, J. M., Kuppermann, N. (2013). Pediatric diabetic ketoacidosis, fluid therapy, and cerebral injury: the design of a factorial randomized controlled trial.Pediatric diabetes,14(6), 435-446. Glaser, N. S., Wootton-Gorges, S. L., Buonocore, M. H., Tancredi, D. J., Marcin, J. P., Caltagirone, R., ... Kuppermann, N. (2013). Subclinical cerebral edema in children with diabetic ketoacidosis randomized to 2 different rehydration protocols.Pediatrics,131(1), e73-e80. Gosmanov, A. R., Gosmanova, E. O., Dillard-Cannon, E. (2014). Management of adult diabetic ketoacidosis.Diabetes, metabolic syndrome and obesity: targets and therapy,7, 255. H Lamb, W. (2014).Pediatric Diabetic Ketoacidosis Treatment Management: Approach Considerations, Fluid Replacement, Insulin Replacement.Emedicine.medscape.com. Retrieved 5 August 2017, from https://emedicine.medscape.com/article/907111-treatment Hsia, D. S., Tarai, S. G., Alimi, A., Coss?Bu, J. A., Haymond, M. W. (2015). Fluid management in pediatric patients with DKA and rates of suspected clinical cerebral edema.Pediatric diabetes,16(5), 338-344. Kumar MV, Manjusha K. (2017). Precipitating factors, clinical profile and metabolic abnormalities of diabetic ketoacidosis in children with type 1 diabetes and their role in predicting the outcome. J. Evid. Based Med. Healthc, 4(8), 393-400. DOI: 10.18410/jebmh/2017/76 Mahler, S. A., Conrad, S. A., Wang, H., Arnold, T. C. (2011). Resuscitation with balanced electrolyte solution prevents hyperchloremic metabolic acidosis in patients with diabetic ketoacidosis.The American journal of emergency medicine,29(6), 670-674. Savage, M. W., Dhatariya, K. K., Kilvert, A., Rayman, G., Rees, J. A. E., Courtney, C. H., ... Hamersley, M. S. (2011). Joint British Diabetes Societies guideline for the management of diabetic ketoacidosis.Diabetic Medicine,28(5), 508-515. Seewi, O., Vierzig, A., Roth, B., Schnau, E. (2010). Symptomatic cerebral oedema during treatment of diabetic ketoacidosis: effect of adjuvant octreotide infusion.Diabetology metabolic syndrome,2(1), 56. Usher-Smith, J. A., Thompson, M. J., Sharp, S. J., Walter, F. M. (2011). Factors associated with the presence of diabetic ketoacidosis at diagnosis of diabetes in children and young adults: a systematic review.Bmj,343, d4092. Usher-Smith, J. A., Thompson, M., Ercole, A., Walter, F. M. (2012). Variation between countries in the frequency of diabetic ketoacidosis at first presentation of type 1 diabetes in children: a systematic review.Diabetologia,55(11), 2878-2894. Wolfsdorf, J. I., Allgrove, J., Craig, M. E., Edge, J., Glaser, N., Jain, V., ... Hanas, R. (2014). Diabetic ketoacidosis and hyperglycemic hyperosmolar state.Pediatric diabetes,15(S20), 154-179. Yaneva, N. Y., Konstantinova, M. M., Iliev, D. I. (2016). Risk factors for cerebral oedema in children and adolescents with diabetic ketoacidosis.Biotechnology Biotechnological Equipment,30(6), 1142-1147.

Interest Rate and Currency Swaps Essay Example

Interest Rate and Currency Swaps Paper CHAPTER 14 INTEREST RATE AND CURRENCY SWAPS SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS I. Describe the difference between a swap broker and a swap dealer. Answer: A swap broker arranges a swap between two counterparts for a fee without taking a risk position in the swap. A swap dealer is a market maker of swaps and assumes a risk position in matching opposite sides of a swap and in assuring that each counterparts fulfills its contractual obligation to the other. 2. What is the necessary condition for a fixed-for-floating interest rate swap to be Seibel? Answer: For a fixed-for-floating interest rate swap to be possible it is necessary for a quality spread differential to exist. In general, the default-risk premium of the taxed-rate debt will be larger than the default-risk premium tot the floating- rate debt. 3. Discuss the basic motivations for a counterparts to enter into a currency swap. Answer: One basic reason for a counterparts to enter into a currency swap is to exploit the comparative advantage of the other in obtaining debt financing at a lower interest rate than could be obtained on its own. A second basic reason is o lock in long-term exchange rates in the repayment Of debt service Obligations denominated in a foreign currency. 4. How does the theory of comparative advantage relate to the currency swap market? Answer: Name recognition is extremely important in the international bond market. Without it, even a creditworthy corporation will find itself paying a higher interest rate for foreign denominated funds than a local borrower of equivalent creditworthiness. We will write a custom essay sample on Interest Rate and Currency Swaps specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Interest Rate and Currency Swaps specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Interest Rate and Currency Swaps specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Consequently, two firms of equivalent creditworthiness can each exploit their, respective, name recognition by borrowing in their local capital racket at a favorable rate and then re-lending at the same rate to the other, S, Discuss the risks confronting an interest rate and currency swap dealer. Answer: An interest rate and currency swap dealer confronts many different types of risk. Interest rate risk refers to the risk of interest rates changing unfavorable before the swap dealer can lay off on an opposing counterparts the unplaced side of a swap with another counterparts. Basis risk refers to the floating rates Of two counterparts being pegged to two different indices. In this situation, since the indexes are not perfectly positively correlated, the swap ann. may not always receive enough floating rate funds from one counterparts to pass through to satisfy the other side, while still covering its desired spread, or avoiding a loss. Exchange-rate risk refers to the risk the swap bank faces from fluctuating exchange rates during the time it takes the bank to lay off a swap it undertakes on an opposing counterparts before exchange rates change. Additionally, the dealer confronts credit risk from one counterparts defaulting and its having to fulfill the defaulting partys obligation to the other counterparts. Mismatch risk refers to the difficulty of the dealer finding an exact opposite attach for a swap it has agreed to take. Sovereign risk refers to a country imposing exchange restrictions on a currency involved in a swap making it costly, or impossible, for a counterparts to honor its swap obligations to the dealer. In this event, provisions exist for the early tear-nation of a swap, which means a loss of revenue to the swap bank. 6. Briefly discuss some variants of the basic interest rate and currency swaps diagramed in the chapter, Answer: Instead of the basic fixed-for-floating interest rate swap, there are also zero-coupon-for-floating rate swaps where the fixed rate payer makes only one error-coupon payment at maturity on the notional value. There are also floating- for-floating rate swaps where each side is tied to a different floating rate index or a different frequency Of the same index. Currency swaps need not be fixed- for-fixed: fixed-formatting and floating-for-floating rate currency swaps are frequently arranged. Moreover, both currency and interest rate swaps can be amortizing as well as non-amortizing. 7. If the cost advantage of interest rate swaps would likely be arbitraged away in competitive markets, what other explanations exist to explain the rapid velveteen of the interest rate swap market? Answer: All types of debt instruments are not always available to all borrowers. Interest rate swaps can assist in market completeness. That is, a borrower may use a swap to get out of one type of financing and to obtain a more desirable type tot credit that is more suitable for its asset maturity structure. . Suppose Morgan Guaranty, Ltd. Is quoting swap rates as follows: 7. 75 8. 10 percent annually against six-month dollar LABOR for dollars and II II percent annually against six-month dollar LABOR for British pound sterling. At hat rates will Morgan Guaranty enter into a $/E currency swap? Answer: Morgan Guaranty will pay annual fixed-rate dollar payments of 75 percent against receiving six-month dollar LABOR flat, or it will receive fixed-rate annual dollar payments at 8. 10 percent against paying six-month dollar LABOR flat. Morgan Guaranty will make annual fixed-rate E payments at 1 1. 25 percent against receiving six-month dollar LABOR flat, or it Will receive annual fixed-rate E payments at 11. 65 percent against paying six-month dollar LABOR flat. Thus, Morgan Guaranty Will enter into a currency swap in Which it would pay annual axed-rate dollar payments of 7. 75 percent in return for receiving semi-annual fixed-rate E payments at II . 65 percent, or it Will receive annual fixed-rate dollar payments at 8. 0 percent against paying annual fixed-rate E payments at 11. 25 percent. 9. A U. S. Company needs to raise It plans to raise this money by issuing dollar- denominated bonds and using a currency swap to convert the dollars to euros. The Corcoran expects interest rates in both the United States and the Euro zone to fall. A. Should the swap be structured with interest paid at a fixed or a floating rate? B. Should the swap be structured with interest received at a fixed or a floating rate? SFA Guideline Answer: a. The U. S. Many would pay the interest rate in euros. Because it expects that the interest rate in the Euro zone Will fall in the future, it should choose a swap with a floating rate on the interest paid in euros to let the interest rate on its debt float down. B. The US. Company would receive the interest rate in dollars. Because it expects that the interest rate in the United States will fall in the future, it should choose a swap with a fixed rate on the interest received in dollars to prevent the interest ate it receives from going down, *10. Assume a currency swap in which two counterparts of comparable credit risk each borrow at the best rate available, yet the nominal rate of one counterparts is higher than the other, After the initial principal exchange, is the counterparts that is required to make interest payments at the higher nominal rate at a financial disadvantage to the other in the swap agreement? Explain your thinking. Answer: Superficially, it may appear that the counterparts paying the higher nominal rate is at a disadvantage since it has borrowed at a lower rate. However, f the forward rate is an unbiased predictor of the expected spot rate and if RIP holds, then the currency with the higher nominal rate is expected to depreciate versus the other. In this case, the counterparts making the interest payments at the higher nominal rate is in effect making interest payments at the lower interest rate because the payment currency is depreciating in value versus the borrowing currency. PROBLEMS I. Alpha and Beta Companies can borrow for a five-year term at the following rates: Alpha Beta Moodys credit rating Fixed-rate borrowing cost 12. 0% Floating-rate borrowing cost LABOR LABOR* a. Calculate the quality spread differential (SD). B. Develop an interest rate swap in which both Alpha and Beta have an equal cost savings in their borrowing costs. Assume Alpha desires floating. Rate debt and Beta desires fixed-rate debt. No swap bank is involved in this transaction. Solution: a. The SD (12. 0% 10. 5%) minus (LABOR * LIBIDO- . 5%. B. Alpha needs to issue fixed-rate debt at and Beta needs to issue floating rate-debt at BOOR 1%. Alpha needs to pay LABOR to Beta. Beta needs to pay 10 75% to Alpha. It this is done, Alphas floating-rate all-in-cost is: 4 LABOR 10. 5% = LABOR . 25% savings over issuing floating-rate debt on its own. Betas fixed-rate all-in- cost is: LIBIDO 1% 10. 75% LABOR 11. 75%, a savings over issuing fixed- 2. 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 10. 7% 10. 8% against LABOR flat. Alpha will issue fixed-rate debt at 10. 5% and Beta will issue floating rate-debt at LABOR * 1%. Alpha Will receive 10. 7% from the swap bank and pay it LABOR. Beta Will pay 10. % to the swap bank and receive from it LABOR. If this is done, Alphas floating- rate all. In. Cost is: 10. 5% LABOR 10. 7% LABOR . .20%, a . 20% savings over issuing floating-rate debt on own. Betas fixed-rate Allan-cost is: LIBIDO 10. 8% LABOR 1 1. 8%, a . 20% savings over issuing fixed. Rate debt. 3. Company A is a Aerated firm desiring to issue five-year Ferns. It finds that it Gang issue Erne at six-month LABOR . 125 percent or at three-month LABOR * . 125 percent. Given its asset structure, three-month LABOR is the preferred index, Company B is an A-rated firm that also desires to issue verifier Pros. It finds it can issue at six-month LABOR + 1. Percent or at three-month LABOR + . 625 percent. Given its asset structure, six-month LABOR is the preferred index. Assume a notional principal of Determine the SD and set up a floating-for-floating rate swap where the swap bank receives , 125 percent and the two counterparts share the remaining savings equally. Solution: The quality spread differential is [(Six-month Al BOOR + 1. 0 percent) minus (Six-month LABOR . 125 percent) z] _875 percent minus [(Three-month LABOR * . 625 percent) minus (Three-month LABOR -e . 25 percent) . 50 percent, which equals 375 percent. If the swap bank receives . 25 percent, each counterparts is to save . 125 percent. To affect the swap, Company A would issue Ferns indexed to six-month LABOR and Company B would issue Erne indexed three-month LABOR. Company B might make semi-annual payments of six-month LABOR 125 percent to the swap bank, which would pass all of it through to Company A. Company A, in turn, might make quarterly payments of three-month LABOR to the swap bank, which would pass through three-month LABOR . ASS percent to Company B. On an annulled basis, Company B will remit to the swap bank six- month LABOR * . 125 percent and pay three-month LABOR . 25 percent on its Ferns. It will receive three-month LABOR , 125 percent from the swap bank. This arrangement results in an all-in cost of six-month LABOR . 825 percent, which is a rate . 125 percent below the F-Runs indexed to six-month LABOR 4 percent Company B could issue on its own. Company A will remit three-month LABOR to the swap bank and pay six-month LABOR 4 . 1 AS percent on its Ferns. It will receive six-month LABOR + . 125 percent from the swap bank. This arrangement results in an all-in cost of three-month LABOR for Company A, which is _ 125 percent less than the Ferns indexed to three-month LABOR + . 25 percent it could issue on its own. The arrangements with the two counterparts net the swap bank . 1 AS percent per annum, received quarterly. A corporation enters into a five-year interest rate swap with a swap bank in which it agrees to pay the swap bank a fixed rate of 3. 75 percent annually on a notional amount of and receive LABOR. As of the second reset date, determine the price of the swap from the corporations viewpoint assuming that the fixed-rate side Of the swap has increased to 10. 25 percent. Solution: On the reset date, the present value Of the future floating-rate aments the corporation will receive from the swap bank based on the notional value Will be The present value Of a hypothetical bond issue Of ?15,000. 000 with three remaining 9. 75 percent coupon payments at the new fixed. Rate of 10. 25 percent is ?1 This sum represents the present value of the remaining payments the swap bank will receive from the corporation. Thus, the swap bank should be willing to buy and the corporation should be willing to sell the swap for = ?185,696. 5. Karl Ferris, a fixed income manager at Angus Capital Management, expects the current positively sloped U. S. Treasury yield curve to shift parallel upward. Ferris owns two $1 corporate bonds maturing on June 15, 1999, one with a variable rate based on 6-month LIST. Dollar LABOR and one with a fixed rate. Both yield SO basis points over comparable IS_S. Treasury market rates, have very similar credit quality, and pay interest semi-annually. Ferris wished to execute a swap to take advantage of her expectation of a yield curve shift and believes that any difference in credit spread between LABOR and LLC. S. Treasury market rates will remain constant. A. Describe a six-month U. S. Dollar LABOR-based swap that would allow Ferris o take advantage Of her expectation. Discuss, assuming Ferris expectation is correct, the change in the swaps value and how that change would affect the value Of her portfolio. [NO calculations required to answer part a. ] Instead Of the swap described in part a, Ferris would use the following alternative derivative strategy to achieve the same result. . Explain, assuming Ferris expectation is correct, how the following strategy achieves the same result in response to the yield curve shift. [No calculations required to answer part b. ] Settlement Date 1215-97 03-15-98 0615-98 09-15-98 12-15-98 03-15-99 Nominal Arteriolar Futures Contract Value 1000. 000 c. Discuss one reason why these two derivative strategies provide the same result. SFA Guideline Answer a. The Swap Value and its Effect on Ferris Portfolio Because Karl Ferris believes interest rates will rise, she will want to swap her fixed-rate corporate bond interest to receive six-month U. S. Dollar LABOR, She will continue to hold her variables six-month U. S. Dollar LABOR rate bond because its payments will increase as interest rates rise. Because the credit risk between the U. S. Dollar LABOR and the US. Treasury market is expected to main constant, Ferris can use the LIST. Dollar LABOR market to take advantage tot her interest rate expectation without affecting her credit risk exposure. To execute this swap, she would enter into a two-year term, semi-annual settle, nominal principal, pay fixed-receive floating IS. S, dollar LABOR swap. If rates rise, the swaps mark-to-market value will increase because the U. S. Dollar LABOR Ferris receives will be higher than the LABOR rates from which the swap was priced. If Ferris were to enter into the same swap after interest rates rise, she would pay a higher fixed rate to receive LABOR rates. This higher fixed rate valued be calculated as the present value of now higher forward LABOR rates. Because Ferris would be paying a stated fixed rate that is lower than this new higher- present-value fixed rate, she could sell her swap ATA premium. This premium is called the replacement cost value Of the swap. B. Arteriolar Futures Strategy The appropriate futures hedge is to short a combination of Arteriolar futures contracts with different settlement dates to match the coupon payments and principal. This futures hedge accomplishes the same objective as the pay fixed-receive floating swap described in Part a. By discussing how the yield- curve shift affects the value of the futures hedge, the candidate can show an understanding of how Arteriolar futures contracts can be used instead of a pay fixed-receive floating swap. It rates rise, the mark-to-market values of the Arteriolar contracts decrease; their yields must increase to equal the new higher forward and spot LABOR rates. Because Ferris must short or sell the Arteriolar contracts to duplicate the pay fixed-receive variable swap in part a, she gains as the Arteriolar futures contracts decline in value and the futures hedge increases in value. As the contracts expire, or if Ferris sells the remaining contracts prior to maturity, she will recognize a gain that increases her return. With higher interest rates, the value of the fixed-rate bond will decrease. Fifth hedge ratios are appropriate, the value of the portfolio, however, will remain unchanged because of the increased value of the hedge, which offsets the fixed-rate bonds decrease. Why the Derivative Strategies Achieve the Same Result Arbitrage market forces make these bono strategies provide the same result to Ferris. The two strategies are different mechanisms for different market artisans to hedge against increasing rates. Some money managers prefer swaps; others, Arteriolar futures contracts. Each institutional market participant has different preferences and choices in hedging interest rate risk, The key is that market makers moving into and out of these two markets ensure that the markets are similarly priced and provide similar returns. As an example of such an arbitrage, consider what would happen it tankard market LABOR rates were lower than swap market LABOR rates. An arbitrageur would, under such circumstances, sell the futures/bombard contracts and enter into a received fixed-pay variable swap. This arbitrageur could now receive the higher fixed rate of the swap market and pay the lower fixed rate of the futures market. He or she would pocket the differences between the two rates (without risk and without having to make any [net] investment. ) This arbitrage could not last. As more and more market makers sold Arteriolar futures contracts, the selling pressure would cause their prices to fall and yields to rise, Which would cause the present value cost of selling the Arteriolar contracts also to increase. Similarly, as more and more market makers offer to receive fixed rates in the swap market, market Akers would have to lower their fixed rates to attract customers so they could lock in the lower hedge cost in the Arteriolar futures market. Thus, Arteriolar forward contract yields would rise and/or swap market receive-fixed rates would fall until the two rates converge. At this point, the arbitrage opportunity would no longer exist and the swap and forwards/futures markets would be in equilibrium. 6. Rene Company asks Paula Scott, a treasury analyst, to recommend a flexible way to manage the companys financial risks. Two years ago, Rene issued a $25 million (U. S. ), five-year floating rate note (FRR). The PORN pays an annual coupon equal to one-year LABOR plus 75 basis points, The FRR is non-callable and will be repaid at par at maturity. Scott expects interest rates to increase and she recognizes that Rene could protect itself against the increase by using a pay-fixed swap. However, Renees Board of Directors prohibits both short sales of securities and swap transactions. Scott decides to replicate a pay-fixed swap using a combination of capital market instruments. A. Identify the instruments needed by Scott to replicate a pay-fixed swap and scribe the required transactions. B. Explain how the transactions in Part a are equivalent to using a pay-fixed a. The instruments needed by Scott are a fixed-coupon bond and a floating rate note (PORN). The transactions required are to: ; issue a fixed-coupon bond with a maturity of three years and a notional amount of $25 million, and ; buy a $25 million FRR of the same maturity that pays one-year LABOR plus 75 BSP. B. At the outset, Rene will issue the bond and buy the FRR, resulting in a zero net cash flow at initiation. At the end of the third year, Rene will repay the fixed- upon bond and will be repaid the FRR, resulting in a zero net cash flow at maturity, The net cash flow associated with each of the three annual coupon payments will be the difference between the inflow (to Rene) on the FRR and the outflow (to Rene) on the bond. Movements in interest rates during the three-year period will determine whether the net cash flow associated with the coupons is positive or negative to Rene_ Thus, the bond transactions are financially equivalent to a plain vanilla pay-fixed interest rate swap. A company based in the United Kingdom has an Italian subsidiary. The subsidiary generates ?25,000,000 a year, received in equivalent semiannual installments of The British company wishes to convert the Euro cash flows to pounds twice a year. It plans to engage in a currency swap in order to lock in the exchange rate at which it can convert the euros to pounds. The current exchange rate is ?1. 5/E. The fixed rate on a plain vanilla currency swap in pounds is 7. 5 percent per year, and the fixed rate on a plain vanilla currency swap in euros is 6. 5 percent per year. A. Determine the notional principals in euros and pounds tort a swap with semiannual payments that will help achieve the objective. B. Determine the semiannual cash flows from this swap. CPA Guideline Answer a. The semiannual cash flow must be converted into pounds is ?12,500,000. In order to create a swap to convert ?12,500,000, the equivalent notional principals are Euro notional principal ?12, 065/2) Pound notional principal = = IOWA,257 b. The cash flows from the swap will now be ; company makes swap payment = = Company receives Swap payment = = The company has effectively converted Euro cash receipts to pounds. 8. Gaston Bishop is the debt manager for World Telephone, Which needs ?3. 33 billion Euro financing for its operations. Bishop is considering the choice between issuance of debt denominated in: [I Euros or U. S. Lars, accompanied by a combined interest rate and currency swap. A. Explain one risk World would assume by entering into the combined interest rate and currency swap. Bishop believes that issuing the u. S. -dollar debt and entering into the swap can lower Worlds cost of debt by 45 basis points. Immediately after selling the debt issue, World would swap the U. S. Dollar payments for Euro payments throughout the maturity of the debt. She assumes a constant currency exchange rate throughout the tenor of the swap. Exhibit 1 gives details tort the two alternative debt issues.