If the World Real Interest Rate Exceeds the Canadian Real

question 63

Multiple Choice

If the world real interest rate exceeds the Canadian real interest rate, what would Canadian savers most likely do?

• A) Canadian savers would prefer to buy foreign assets.
• B) Canadian savers would prefer to buy Canadian assets.
• C) Canadian savers will prefer to wait until the two real interest rates are again equal.
• D) Canadian savers will sell their foreign assets and buy Canadian assets instead.

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Definitions:

Investment Account

A financial account that holds securities, stocks, bonds, and other investments for the benefit of an investor.

Subsidiary

A company that is completely or majority-owned by another company, referred to as the parent company.

GAAP

Generally Accepted Accounting Principles, a set of rules and standards designed to ensure consistency, transparency, and integrity in the financial reporting of companies in the United States.

Amortization

The systematic allocation of the cost of an intangible asset over its useful life, reflecting the consumption of the asset's economic benefits.