You Have a Contractual Cash Inflow Denominated in a Foreign

question 40

True/False

You have a contractual cash inflow denominated in a foreign currency and to be received in six months. You will gain if the foreign currency appreciates in value over the next six months.

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Definitions:

Simple Interest

A method of calculating the interest charge on a loan based on the original principal balance and not on accumulated interest.

T-bill

A short-term government security with maturity periods ranging from a few days to 52 weeks.

Prevailing Yield

The current return rate on an investment, typically referring to bonds or other fixed-income securities.

Simple Interest

Interest calculated only on the principal amount, or the initial sum of money invested or borrowed, without compounding.