Morton Company obtains a one-year loan of 2,000,000 Japanese yen at an interest rate of 6%. At the time the loan is extended, the spot rate of the yen is $.005. If the spot rate of the yen at maturity of the loan is $.0035, what is the effective financing rate of borrowing yen?
A) 37.8%.
B) 51.43%.
C) -25.8%.
D) -6%.
E) none of the above
Correct Answer:
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