Effective financing rate for us dollar

Assignment Help Finance Basics

Reference no: EM13827967

Problem:

Assume the U.S. one-year interest rate is 8%, and the British one-year interest rate is 6%. The one-year forward rate of the pound is $1.97. The spot rate of the pound at the beginning of the year is $1.95. By the end of the year, the pound's spot rate is $2.05, based on the information, what is the effective financing rate for a U. S. firm that takes out a one-year, uncovered British loan?

Additional information:

The short answer question is from Finance and it is about effective financing rate for US Dollar in comparison with British Pound with US 1 yr interest rate of 8% as well as British 1 yr interest rate of 6%.

Reference no: EM13827967

Questions Cloud

Grassroots credibility please explain : Discuss why a social marketplace is considered to be a Web 2.0 instrument. Please include several examples to demonstrate your point. Is it possible for Web sites to "go corporate" while retaining their grassroots credibility? Please explain.

How have leaders wielded power in different ways : Reaction Paper: Wielding Power How have leaders wielded power in different ways? Provide at least two examples and cite sources appropriately; note whether or not each example promoted leadership effectiveness and how. Use the module resources to gui..

Classification of activities and products : Classification Of Activities And Products

Comment on the usefulness of the equation to make prediction : Develop a prediction equation. Comment on the usefulness of the equation to make predictions (SEE, No Image, F-test, and slope coefficient significance).

Effective financing rate for us dollar : Assume the U.S. one-year interest rate is 8%, and the British one-year interest rate is 6%. The one-year forward rate of the pound is $1.97.

Type of business form accepted in all states : Legal StructuresIs this type of business form accepted in all states?

Identify the challenges the company islikely to face : (1) Using one country of your choice, critically applythe PESTEL framework to FORD in order to identify the challenges the company islikely to face in the future (2) Building on your question 1 analysis, whatstrategic advice would you give to For..

Calculation of cost reduction to achieve profit margin : Calculation Of Cost Reduction To Achieve Profit Margin

Consider financing from its subsidiaries : Discuss why an MNC parent may consider financing from its subsidiaries. Validate the answer with relevant resources.

User Account

All Pages