Asset Approach Models to Exchange Rate Determination Put More Emphasis

question 24

True/False

Asset approach models to exchange rate determination put more emphasis on financial assets rather than relying on international trade in goods to explain exchange rate changes. Therefore, there is no useful role for trade flows in these models.

---

Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to improve its long-term performance and efficiency.

Cash Dividends

Profits paid by a corporation to its shareholders in the form of cash.

Free Cash Flow

The amount of cash a company generates after accounting for capital expenditures, effectively showing the liquidity available for expansion, dividends, or debt repayment.

Net Income

Represents the total earnings of a company, calculated as the revenues minus the expenses, taxes, and costs.