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XYZ company, based in the US, plans to finance in Japanese yen. The interest rate will be 10%. It has used a currency contract to

XYZ company, based in the US, plans to finance in Japanese yen. The interest rate will be 10%. It has used a currency contract to lock in a 2% appreciation of the yen vs. the USD. What is the effective interest rate it will pay:

12.2%

10.2%

8.2%

5.8%

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