Determining effective financing rate

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Reference no: EM1345200

Suppose the U.S. interest rate is 7.5%, the New Zealand interest rate is 6.5%, the spot rate of NZ$ is $.52, and the one? Year forward rate of the NZ$ is $.52. At the end of the year, the spot rate is $.48. Based upon this information, what is the effective financing rate for a U.S. firm that takes out a one year, uncovered NZ$ loan?

Reference no: EM1345200

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