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What is the effective financing rate for a us

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Reference no: EM132088297

Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.049, the spot rate of the NZ$ is $0.57, and the one-year forward rate of the NZ$ is $.50. At the end of the year, the spot rate is $0.43. Based on this information, what is the effective financing rate for a U.S. firm that takes out a one-year, uncovered NZ$ loan?

Reference no: EM132088297

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