Assume the U.S. interest rate is .075, the Australia interest rate is 0.049, the spot
rate of the AD$ is $0.57, and the one‑year forward rate of the AD$ is $.50. At
the end of the year, the spot rate is $0.43. Based on this information, what is
the effective financing rate for a U.S. firm that takes out a one‑year,
uncovered AD$ loan?
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