Assume That the Interest Rate in a Foreign Country Is

question 64

Multiple Choice

Assume that the interest rate in a foreign country is 6% and that the foreign currency is expected to depreciate by 2% during the year. For each dollar that an Australian resident invests in foreign bonds, he/she can expect to get back a total of:

• A) $0.94.
• B) $1.24.
• C) $1.14.
• D) $1.04.
• E) $0.84.

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Definitions:

Gallup Poll

A type of public opinion poll conducted by Gallup Organization, designed to represent the opinions of a population by asking a series of questions.

Happier

A wellness state defined by experiencing feelings from being pleased to feeling extreme elation.

Money

A medium of exchange that facilitates the transfer of goods and services.

Buying Power

The ability of an individual or group to purchase goods and services, often influenced by income and prices.