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58. A US company borrows British pounds for one year at 6 percent. The US one-year interest rate is 8 percent. The one-year forward rate

58.

A US company borrows British pounds for one year at 6 percent. The US one-year interest rate is 8 percent. The one-year forward rate of the pound is $1.93.

The spot rate of the pound at the beginning is $1.95. The pound's spot rate is$2.05 by the end of the year. Based on the information, compute the percentagechange in pound and the effective interest rate of the loan in US dollar terms.A.5.1%, 10.0%B.6.1%, 11.4%C.5.1%, 11.4%D.7.0%, 12.0%E.8.0%, 12.5%

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