Determining effective financing rate

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

Questions Cloud

Meaning of the term mechatronics : Briefly describe the meaning of the term mechatronics both in terms of the 'systems approach' and the technology involved.

Reducing the social security payroll tax rate : If the Social Security retirement system was a private retirement system, it would be declared bankrupt. Discuss and explain why this is so and why the Social Security system can continue to pay benefits.

What influence has expansion into new markets : Write a three pages single space on ‘What influence has expansion into new markets as well as development of products had on Disney's success

Quoted material should have accompanying citations : All sources utilized including the textbook essential be referenced paraphrased as well as quoted material should have accompanying citations following APA guidelines

Determining effective financing rate : 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

Should be referenced paraphrased and quoted material : should be referenced paraphrased and quoted material must have accompanying citations APA guidelines

Leadership practices and approaches : Conduct research on Martha Stewart Omnimedia, focusing on the period when it was most successful. What type of leadership patterns can you discern that would describe the earlier success of Martha Stewart Omnimedia?

What are the pros as well as cons of sending jobs overseas : Several individuals feel that they have little influence over the wage rate they receive and that employers decide unilaterally what wage they will pay, What are the pros as well as cons of sending jobs overseas

Translation amount on balance sheets : Assume that on January 1, American Golf's French subsidiary, Golf du France, had balance sheet that showed current assets of FF 1 million; current liabilities of FF 300,000; total assets of FF 2.5 million and total liabilities of FF 900,000.

User Account

All Pages