A Reduction in the U

question 123

Multiple Choice

A reduction in the U.S. interest rate relative to the British interest rate will cause a(an) :

• A) appreciation of the dollar and an appreciation of the British pound.
• B) depreciation of the dollar and an appreciation of the British pound.
• C) depreciation of the dollar and a depreciation of the British pound.
• D) appreciation of the dollar and a depreciation of the British pound.

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Definitions:

Current Ratio

The Current Ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Quick Ratio

A liquidity measure that indicates a company's ability to cover its short-term liabilities with its most liquid assets.

Cash Ratio

A liquidity ratio that measures a company's ability to pay off its short-term liabilities with its cash and cash equivalents alone.

NWC to Total Assets

A financial ratio that measures the net working capital (current assets minus current liabilities) in relation to the total assets of a company.