Exhibit 20-1
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.
-Maston Corporation has forecasted the value of the Russian ruble as follows for the next year: If the Russian interest rate is 30%, the expected cost of financing a one-year loan in rubles is:

Question

Exhibit 20-1
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.
-Maston Corporation has forecasted the value of the Russian ruble as follows for the next year:  If the Russian interest rate is 30%, the expected cost of financing a one-year loan in rubles is:

Quizplus · Accepted Answer

The Answer of Exhibit 20-1
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.
-Maston Corporation has forecasted the value of the Russian ruble as follows for the next year:  If the Russian interest rate is 30%, the expected cost of financing a one-year loan in rubles is:

Exhibit 20-1 Assume a U.S.-Based MNC Is Borrowing Romanian Leu (ROL) at (ROL)