Question $11$

$3pts$

Assume the British one$-$year interest rate is $6$ percent. The spot rate of the pound at the beginning of the year is $$1\mathrm{.}95.$ By the end of the year, the pound's spot rate is $$2\mathrm{.}05.$ Based on the information, what is the effective financing rate for a U$.$S$.$ firm that takes out a one$-$year British loan?

about $10\mathrm{.}3$ percent

about $11\mathrm{.}4$ percent

about $7\mathrm{.}1$ percent

about $12\mathrm{.}4$ percent