Question
Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.058, the spot rate of the NZ$ is $0.55, and the oneyear
Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.058, the spot rate of the NZ$ is $0.55, and the oneyear forward rate of the NZ$ is $.50. At the end of the year, the spot rate is $0.44. Based on this information, what is the effective financing rate for a U.S. firm that takes out a oneyear, uncovered NZ$ loan?
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Real Estate Investment Strategies Structures Decisions
Authors: David Hartzell, Andrew E. Baum
2nd Edition
1119526094, 978-1119526094
