The Effective Financing Rate of Financing in a Foreign Currency

Multiple Choice

The effective financing rate of financing in a foreign currency is directly determined by the ____ over the loan period and the ____ over the loan period.

A) interest rate of the domestic currency; percentage change in the value of the foreign currency
B) interest rate of the foreign currency; percentage change in the value of the foreign currency
C) interest rate of the foreign currency; percentage change in inflation
D) interest rate of the domestic currency; percentage change in inflation