FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698
FindFind

International Financial Management

14th Edition
Madura
Publisher: Cengage
ISBN: 9780357130698

Solutions

Chapter 20, Problem 4ST
Textbook Problem

The spot rate of the Australian dollar is $0.62 The one-year forward rate of the Australian dollar is $0.60, and the Australian one-year interest rate is 9 percent. Assume that the forward rate is used to forecast the future spot rate. Determine the expected effective financing rate for a U.S. firm that borrows Australian dollars to finance its U.S. business.

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