Assume the U. S. one-year interest rate is 8 percent, and the British one-year interest rate is 6 percent. The one-year forward rate of the pound is $1.97. The spot rate of the pound at the beginning of the year is $1.95. By the end of the year, the pound's spot rate is $2.05. Based on the information, what is the effective financing rate for a U. S. firm that takes out a one-year, uncovered British loan? a. about 12.4 percentb. about 7.1 percentc. about 10.3 percentd. about 11.4 percent
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