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Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.060, the spot rate of the NZ$ is $0.55, and the one-year forward rate of the NZ$ is $.50. At the end of the year, the spot rate is $0.45. Based on this information, what is the effective financing rate for a U.S. firm that takes out a one-year, uncovered NZ$ loan?

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Financial Management, Finance

Category:- Financial Management
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