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Assume the U.S. one-year rate is 8%, and the British one-year interest rate is 6%....

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Finance

Assume the U.S. one-year rate is 8%, and the British one-year interest rate is 6%. 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 pounds 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? How about on covered basis?

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