Assume a U

Multiple Choice

Assume a U.S.-based MNC is borrowing Romanian leu (ROL) at an interest rate of 8% for one year.Also assume that the spot rate of the leu is $.00012 and the one-year forward rate of the leu is $.00010.The expected spot rate of the leu one-year from now is $.00011.What is the effective financing rate for the MNC assuming it borrows leu on an uncovered basis

A) about 10%.
B) about -10%.
C) about -1%.
D) about -2%.
E) none of the above