Assume a U

question 29

Multiple Choice

Assume a U.S.-based MNC is borrowing Romanian leu (ROL) at an interest rate of 8% for one year.Also assume that the spot rate of the leu is $.00012 and the one-year forward rate of the leu is $.00010.The expected spot rate of the leu one-year from now is $.00011.What is the effective financing rate for the MNC assuming it borrows leu on an uncovered basis

• A) about 10%.
• B) about -10%.
• C) about -1%.
• D) about -2%.
• E) none of the above

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Definitions:

United States Supreme Court

The apex judicial authority in the U.S., responsible for interpreting the Constitution and adjudicating disputes with final authority.

Colonize The Philippines

The historical period during which European powers, primarily Spain followed by the United States, established dominion over the Philippine archipelago, impacting its culture, religion, and government.

Booker T. Washington

An influential African American educator, author, and advisor to several U.S. Presidents, who advocated for the economic and educational advancement of African Americans in the late 19th and early 20th centuries.

Annexation Of The Philippines

The process by which the United States took control of the Philippines from Spain in 1898 following the Spanish-American War.