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The U. S. interest rate is 8 percent and the euros interest rate is 5 percent. The euros forward rate has a premium of 4

The U. S. interest rate is 8 percent and the euros interest rate is 5 percent. The euros forward rate has a premium of 4 percent. (1) Calculate the effective financing rate for U S firms. (2) Does interest rate parity hold? (3) Could U S firms lock in a lower financing cost by borrowing euros and purchasing euros forward for one year? Explain

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