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A firm forecasts the euros value as follows for the next year: Possible Percentage Change Probability -0.05 10% 0.01 50% 0.05 40% The annual interest

A firm forecasts the euros value as follows for the next year:

Possible

Percentage Change Probability

-0.05 10%

0.01 50%

0.05 40%

The annual interest rate on euro is 7%. The expected value of the effective financing rate from a U.S. firms perspective is about:

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