1. The annual interest rate on the Canadian dollar is 9%. The forecast of the Canadian dollar's value for the next year is shown below. Calculate the effective financing rate for a U.S. company. Show how you derive the answer.
Percentage Change Probability
-1.0% 15%
-1.5% 30%
-2.0% 55%
2.The annual interest rate on the Swiss franc is 4%. It is expected to appreciate 3% over the next year. Calculate the effective financing rate for a U.S. company. Show how you derive the answer.