Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.062, the spot rate of the NZ$ is $0.56, and th

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answerhappygod
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Assume the U.S. interest rate is .075, the New Zealand interest rate is 0.062, the spot rate of the NZ$ is $0.56, and th

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Assume the U.S. interest rate is .075, the New Zealand interest
rate is 0.062, the spot rate of the NZ$ is $0.56, and the one‑year
forward rate of the NZ$ is $.50. At the end of the year, the spot
rate is $0.41. Based on this information, what is the effective
financing rate for a U.S. firm that takes out a one‑year, uncovered
NZ$ loan?
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