What is the effective financing rate

Reference no: EM131538570

Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.055, the spot rate of the NZ$ is $0.58, and the one-year forward rate of the NZ$ is $.50. At the end of the year, the spot rate is $0.47. Based on this information, what is the effective financing rate for a U.S. firm that takes out a one-year, uncovered NZ$ loan?

Reference no: EM131538570

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