Assume the us interest rate is 75 the new zealand interest, Ask an Expert

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Assume the U.S. interest rate is 7.5%, the New Zealand interest rate is 6.5%, the spot rate of the NZ$ is $.52, and the one year forward rate of the NZ$ is $.50. At the end of the year, the spot rate is $.48. Based on this information, what is the effective financing rate for a U.S. firm that takes out a one year, uncovered NZ$ loan? SHOW ALL WORK

A) about –1.7%.

B) about 0.0%.

C) about 14.7%.

D) about 15.4%.

E) about 8.3%.

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Financial Management, Finance

Category:- Financial Management
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