Question
Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.059, the spot rate of the NZ$ is $0.54, and the oneyear
Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.059, the spot
rate of the NZ$ is $0.54, and the oneyear forward rate of the NZ$ is $.50. At
the end of the year, the spot rate is $0.47. Based on this information, what is
the effective financing rate for a U.S. firm that takes out a oneyear,
uncovered NZ$ loan?
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Financial Institutions Management A Risk Management Approach
Authors: Anthony Saunders, Marcia Millon Cornett
9th edition
1259717771, 1259717772, 9781260048186, 1260048187, 978-1259717772
