A negative effective financing rate for a U.S. firm implies that the firm:
A) will incur a loss on the project financed with the funds.
B) paid more interest on the funds than what it would have paid if it had borrowed dollars.
C) will be unable to repay the loan.
D) none of the above

Question

Quizplus · Accepted Answer

A negative effective financing rate implies that the firm effectively gained from the financing, possibly due to favorable exchange rate movements, rather than incurring a loss or being unable to repay the loan.

A Negative Effective Financing Rate for a U