A U.S. investor obtains Brazilian real (BRL) when the exchange is worth BRL5.0000/$ and invests...
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A U.S. investor obtains Brazilian real (BRL) when the exchange is worth BRL5.0000/$ and invests in a one-year money market security that provides a yield of 7 percent annually (in Brazilian real). At the end of one year, the investor converts the Brazilian real proceeds from the investment back to dollars at the prevailing spot exchange rate or BRL4.0000/$. How many percent is the effective yield for the U.S. investor in U.S. dollar terms. (Note: Use the exact method).
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