If the Interest Rate Is 7 Percent on Euro-Denominated Assets

question 70

Multiple Choice

If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets,and if the dollar is expected to appreciate at a 4 percent rate,for Francois the Frenchman the expected rate of return on dollar-denominated assets is

• A)11 percent.
• B)9 percent.
• C)5 percent.
• D)3 percent.
• E)1 percent.

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Definitions:

High-low Method

A technique used in cost accounting to estimate fixed and variable costs associated with production by using the highest and lowest levels of activity.

Office Expense

Refers to the costs associated with running an office, including rent, supplies, and utilities.

Escrow Completed

The point at which all conditions of a real estate transaction are met and the title of the property is transferred from the seller to the buyer.

Monthly Fixed Cost

Regular expenses that do not vary with production level or sales volume, incurred on a monthly basis.