What Is an Accurate Description of the Relationship Between International

question 35

Multiple Choice

What is an accurate description of the relationship between international business and domestic business?

• A) The domestic economic climate has no effect on a company's competitive position in foreign markets.
• B) Domestic businesses must focus on capital mobility toward international businesses before capital generation.
• C) Countries must not restrict foreign investment even if domestic economic conditions deteriorate.
• D) The ability to invest abroad is to a large extent a function of domestic economic vitality.
• E) Domestic businesses are more viable than international businesses as capital tends to move toward minimum use.

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Definitions:

Forward Rate

An agreed-upon price for a financial transaction that will occur at a future date, used in the trading of currencies, commodities, and financial instruments.

Risk-Free Rate

A speculative return rate on a risk-free investment, often exemplified by government bond yields.

Future Exchange Rate

The future exchange rate is the agreed-upon rate at which two currencies will be exchanged on a specified future date, used in hedging and trading strategies.

Spot Exchange Rate

The present exchange rate for immediate swap of one currency to another.