Final answer:
To determine the effective yield for Kate's investment in Euro–commercial paper, factors such as the difference between the par value and the purchase price of the paper, as well as changes in the currency exchange rate at the time of maturity, should be considered. However, without explicit interest rates or formulas, an exact answer cannot be provided.
Step-by-step explanation:
To calculate the effective yield that Kate, a U.S. investor, would receive from her investment in Euro–commercial paper with a par value of 10,000,000 Indian rupees, which she purchased for 9,960,000 Indian rupees, we must consider both the return due to the paper's maturity and any potential gains or losses from currency exchange rate fluctuations.
Kate's yield from the maturity of the paper is calculated by the difference between the par value (10,000,000 INR) and the purchase price (9,960,000 INR). The spot rate at the end of maturity is also a factor affecting the investment return through the change in value of the paid out rupees when converted back to dollars.
However, without knowing the interest rates and other specific financial formulas in the context of this question, we cannot provide an accurate yield calculation. It is recommended to apply appropriate financial formulas and include any relevant commissions or fees that may apply.