If an MNC Finances with a Currency Different from Its

question 31

Multiple Choice

If an MNC finances with a currency different from its invoice currency, it would prefer that the loan be denominated in a currency that:​

• A) ​exhibits a low interest rate and is expected to appreciate.
• B) ​exhibits a low interest rate and is expected to depreciate.
• C) ​exhibits a high interest rate and is expected to depreciate.
• D) ​exhibits a high interest rate and is expected to appreciate.

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Definitions:

Consumer Confidence

A statistical measure that reflects the overall economic health as perceived by consumers, based on their spending and saving habits.

Stock Market

A public marketplace for buying and selling shares of publicly held companies, reflecting the investment climate and economic health.

Housing Construction

The process of building residential structures such as houses, apartments, and townhomes.

Mercantilism

The incorrect theory that a nation’s economic objective should be to accumulate precious metals in the public treasury; this theory prompted trade barriers to cut imports, but other countries retaliated, reducing trade and the gains from specialization.