Question
Assume the U.S. interest rate is .075, the Australia interest rate is 0.049, the spot rate of the AD$ is $0.57, and the oneyear forward
Assume the U.S. interest rate is .075, the Australia interest rate is 0.049, the spot
rate of the AD$ is $0.57, and the oneyear forward rate of the AD$ is $.50. At
the end of the year, the spot rate is $0.43. Based on this information, what is
the effective financing rate for a U.S. firm that takes out a oneyear,
uncovered AD$ loan?
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Basic Finance An Introduction To Financial Institutions, Investments, And Management
Authors: Herbert B. Mayo
12th Edition
1337691011, 978-1337691017
