To benefit from the low correlation between the Swiss Franc (CHF) and the Japanese yen (JPY), Smith Corporation decides to borrow 50% of funds needed in CHF and the remaining 50% in JPY. The domestic U.S. financing rate for a one-year loan is 7%. The Swiss one-year interest rate is 6% and the Japanese one-year interest rate is 10%. Smith has determined the following possible percentage changes in the two individual currencies as follows:

Currency	Percentage Change	Probability
Swiss Franc	2.0%	30%
Swiss Franc	4.0%	70%
Japanese yen	-3.0%	60%
Japanese yen	1.0%	40%

What is the expected effective dollar financing rate of the portfolio Smith is contemplating (assume the two currencies move independently from one another, in other words Corr = 0)?