Suppose That the U

question 502

Multiple Choice

Suppose that the U.S. interest rate is 5 percent and the Japanese interest rate is 1 percent. The effect of this difference in the foreign exchange market is that

• A) investors expect the yen to appreciate against the dollar.
• B) all funds flow to the United States to get the higher interest rate.
• C) investors expect the yen to depreciate against the dollar.
• D) a Japanese investor is guaranteed to make an additional 4 percent in yen terms by investing in the United States.

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Definitions:

Negative Points

Detrimental aspects, criticisms, or disadvantages associated with a particular situation, proposal, or item.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its identifiable assets, often associated with the company's brand, reputation, and customer relationships.

Passive Voice

A sentence construction where the subject of the sentence is acted upon, often deemphasized action doers and focusing on the action itself.

Supplier Delay

A situation where a supplier fails to deliver goods or services on time, potentially causing disruptions in the supply chain.