Question: Assume that the U.S. interest rate is 7% while the interest rate on the euro is 11%. If euros are borrowed by a U.S. firm,
Assume that the U.S. interest rate is 7% while the interest rate on the euro is 11%. If euros are borrowed by a U.S. firm, they would have to _______ against the dollar by about _______ in order to have the same effective financing rate (break-even) from borrowing dollars.
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