Assume that the Swiss franc has an annual interest rate of 8% and is expected to depreciate by 6% against the dollar. From a U.S. perspective, the effective financing rate from borrowing francs is:
A)8%.
B)14.48%.
C)2%.
D)1.52%.

Name: Assume that the Swiss franc has an annual interest rate of 8% and is expected to depreciate by 6% against the dollar. From a U.S. perspective, the effective financing rate from borrowing francs is: A)8%. B)14.48%. C)2%. D)1.52%.
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Question

Quizplus · Accepted Answer

(1 + 8%)[1 + (-6%)] - 1 = 1.52%.

Assume That the Swiss Franc Has an Annual Interest Rate